Bankruptcy and Financial Concepts

This set of flashcards covers essential terms and concepts related to bankruptcy, credit, insurance, investments, and financial planning.

Bankruptcy

A federal court proceeding designed to help individuals address debt problems and to provide fair treatment to creditors.

Asset

A resource with economic value that an individual, corporation, or country owns with the expectation that it will provide future benefits.

Equity

The difference between the market value of an asset and what is owed on the asset.

Chapter 7 Bankruptcy

Liquidation or straight bankruptcy for individuals or businesses with insufficient income to pay debts.

Chapter 9 Bankruptcy

For reorganization of municipalities, providing protection while a plan to address debts is developed.

Chapter 11 Bankruptcy

Business reorganization where the debtor proposes a plan to stay in business and pay creditors back over time.

Chapter 12 Bankruptcy

Financial relief for family farmers or fishermen.

Dischargeable Debt

Debt that can be eliminated through bankruptcy.

Non-Dischargeable Debt

Debt that cannot be eliminated through bankruptcy.

Credit Score

A single number assigned to a person used by lenders to predict the risk that borrowers will not repay.

Premium (Insurance)

An amount to be paid for an insurance policy.

Deductible

The amount of money you pay out of pocket before your insurance pays for covered expenses.

Liability Insurance

Covers costs of property damage or injuries to others caused by the policy owner.

Net Worth

A measure of wealth determined by calculating the difference between one's assets and liabilities.

Gross Income

Total income without any deductions.

Disposable Income

The money left to spend or save after paying taxes and other deductions.

Retirement Account

Specialized accounts designed to help individuals save and grow their money for retirement, often with tax advantages.

401(k) Plan

An employer-sponsored retirement plan allowing significant tax-deferred savings.

Roth IRA

An individual retirement account allowing tax-free withdrawals in retirement.

Interest Rate Risk

The risk that changing interest rates will negatively affect the value of an investment.

Bond Ratings

Grades assigned to bonds by agencies to indicate their credit risk.

Asset Allocation

Dividing an investment portfolio among different asset classes.