The following is a comprehensive live of legal terms particular to bankruptcy proceedings that you will come across during court proceedings:

• Bankruptcy Trustee – A person or corporation, appointed by the bankruptcy court that acts on behalf of the creditors. After reviewing the debtor’s petition, liquidates (sells) your property under Chapter 7 filings, and then pays the creditors. Under Chapter 13, the trustee oversees a repayment plan negotiated upon between the courts and the filer.
• Credit Counseling – Before filing for bankruptcy, any filer is required to undergo counseling with a non-profit agency. All filers, upon undergoing bankruptcy must complete a course in in-person financial management before the debt can be discharged. Typically, all filers are required to undergo these things, but in certain circumstances can be waived.
• Discharged Bankruptcy – Under Chapter 7, this occurs all non-exempt assets have been sold and creditors paid. Under Chapter 13, it means the filer has completed the time period of the repayment plan. This only happens once the bankruptcy proceedings are complete.
• Exempt Property – This pertains to certain assets owned by the filer, such as cars, tools connected to the filer’s job, etc. Depending on what state you reside in, determines what you are allowed to keep.
• Lien – The creditor is allowed to hold and sell the debtor’s real estate properties for either security or to repay the debt.
• Liquidation – This sale of the debtor’s non-exempt property is used to pay the debt.
• Means Test – A test required by the courts to demonstrate if the debtor has the ability to repay their debts. It is also used to curtail abuse of the bankruptcy code. The test itself accounts for the debtor’s income, assets, expenses, and unsecured debt. If the debtor fails to pass the means test, if filing for Chapter 7, maybe dismissed, and converted into a Chapter 13 proceeding.
• Reaffirmed Account – Specific to Chapter 7,  the debtor may agree to continue paying a debt that could be discharged. This “reaffirms” the account and your commitment to paying off your debt. This is usually allowed so the debtor can keep a piece of collateral, such as a vehicle that otherwise could be sold to pay the debt.
• Secured Debt – This is any debt that the creditors can seize such as a home backed by a mortgage, or a car backed by an auto loan in case you default on your loan.
• Unsecured Debt – Such as a credit card balance, this is debt that has no tangible collateral.

When considering filing for bankruptcy, there is one thing that you need to ask yourself, “Can I pay off my debt in less than five years?” If the answer is no, then it might be time. The reasoning for this is that bankruptcy code was written to give people a second chance, not to punish them. Bankruptcy is to be seen as a way out to those who through some combination of bad luck or choices have been devastated financially.

Upon denial of bankruptcy, there are still other ways to obtain relief. These include management programs, debt consolidation loans or debt settlement. Each of these typically require 3-5 years to reach resolution and none of them guarantees all your debts will be settled when you finish. The benefit of this is that there will be a great mental and emotional lift when all your debts are eliminated, and you have a fresh start.

Although bankruptcy can eliminate a lot of debt, it cannot eliminate all forms of debts. The following are types of debts that typically cannot be discharged.

• Most Student Loan Debt
• Court-Ordered Alimony
• Court-Ordered Child Support
• Reaffirmed Debt
• A federal tax lien for taxes owed to the U.S. Government.
• Government fines or penalties
• Court fines and penalties

Having a bankruptcy on your credit report may make it difficult to get approved for any future credit, such as a card to your local grocery store. This may continue until the bankruptcy is removed from your report,  which as stated before can last up to a decade.

You will want to start rebuilding right away. Stay consistent on any future payments, and make sure they are on time. It may be difficult but changing negative habits into positive ones is a key part of getting out of debt.