Learning about bankruptcy can be a difficult and time consuming task. There are many different concepts to remember as well as points to bankruptcy itself which can sometimes inhibit the learning process. However, taking the time to learn a little more in depth information about bankruptcy can help a person to better understand his finances and how the economic system works. Also, should the need ever arise to file for bankruptcy a person will have a better understanding of how the system works and what lies in store for him.
Some Terms to Learn
Of course, there are hundreds of terms that are pertinent to bankruptcy. It would take pages to list them all; however, there are a few particular terms that may hold some interest to the average person learning more about bankruptcy. These terms may not be incredibly fascinating, but they may help people to learn more about the subject and to better understand the flow of the system and the process of filing for bankruptcy.
One of the most important terms in bankruptcy is “absolute priority.” This term refers to the order of creditors to whom payment must be made. The order of the creditors will be mandated by the bankruptcy code, and this order for payment will be followed as the individual’s or company’s assets and properties are divided to pay for the debt. Likewise, “asset” is an equally important term, since most all bankruptcies will involve a division of assets. An asset for a business is considered an economic resource that will help the business in the future. The same can be said for an individual in similar terms.There are also several chapters under which people or companies can file. Chapter eleven bankruptcy usually pertains to businesses, while chapter nine pertains to municipalities (although this is rare). Chapter seven is one of the most commonly used chapters. Under this chapter, assets are liquefied and divided among the creditors. Chapter ten has to do with small business bankruptcies. Once a case has been filed in court, it will go on the docket, which is the schedule of the hearing.