Houston terms and types of bankruptcy

Houston terms and types of bankruptcy

There are several terms and types of bankruptcy which we have to be familiar with. The bankruptcy procedure has great chances of variation from one state to another, the fundamentals and the basic terminology remains the same. Moreover everywhere the same procedure is followed. The basic knowledge of the two parties involved in the filing of bankruptcy is to be had.

They are the debtor and second one is the creditor. As the name suggests the debtor refers to the person who owes an amount or debt to another person. The creditor will be the company or the organization which is claiming that the debtor owes them a service, property or money, most importantly. An individual or a company can play the role of a debtor. There are several cases of bankruptcy dealing with several creditors.

There can be two kinds of debt taken by the debtors- it could be either a secured debt or it could be an unsecured one. Secured debts refer to those types of debts in which the borrower, that is the creditor has got all the legal rights to a thing of yours in case you have failed to make proper repayments. The best example is mortgaging your home or car and getting money.

In case you fail to pay the instalments your property has chances of being foreclosed by the bank. It is not at all easy to get a secured debt in case of a business. The creditors may get the advantage of the patents or trademarks of the company just because they have given a secured debt. In any case of settlement of bankruptcy it is the secured creditors who are paid first.