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» Banruptcy Law

CHAPTER 7
In a Chapter 7 Bankruptcy, you are not obligated to pay anything to your unsecured creditors, with few exceptions. Those exceptions include student loans, certain taxes and child support payments.

A typical Chapter 7 debtor will not appear in court and will not see the bankruptcy judge unless an objection is raised in the case. Usually, the only formal proceeding at which a debtor must appear is the meeting of creditors, which is usually held at the offices of the U.S. trustee. This meeting is informally called a "341 meeting."

A Chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets.

In addition to the petition, the debtor must also file with the court: (1) schedules of assets and liabilities; (2) a schedule of current income and expenditures; (3) a statement of financial affairs; and (4) a schedule of executory contracts and unexpired leases. Debtors must also provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case (including tax returns for prior years that had not been filed when the case began).

Individual debtors with primarily consumer debts must file a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts.  

An objection to discharge or to the dischargeability of certain debts is considered a separate lawsuit (an adversary proceeding) within the bankruptcy and may result in a trial before the judge assigned to the case. Corporate and partnership Chapter 7 debtors do not receive discharges. If there is no property from which a dividend can be paid, the trustee will prepare a report of no distribution and the case will be closed. If there is property that is not exempt, funds will be available for distribution to creditors. The court will set claims deadlines and notify all creditors to file their claims. The trustee will proceed to collect the assets, liquidate (sell) them and distribute the proceeds to creditors. When all proceeds have been distributed, and all assets have been completely administered, the court will close the case.

  » FAQs
  1. How much does a bankruptcy cost? The legal fees and filing fees differ depending on which chapter you file. During our free consultation, we will discuss the fees.

  2. Can I keep my vehicles if I file bankruptcy? Yes. If you are behind on payments a bankruptcy will allow you to keep the vehicles and reorganize your payments.

  3. What can I expect at bankruptcy court? The bankruptcy process is quite informal. You will be asked a series of yes or no questions verifying that the information you have provided is correct. It will take approximately 10 to 15 minutes for your hearing.

  4. If I’m married and want to file, does my spouse have to file too?  
    No. Married people can file without the other spouse.

  5. How does a bankruptcy affect my credit? Typically, by the time people are considering bankruptcy, they have fallen behind on their bills. The bankruptcy will allow you to discharge your debts, which will improve your debt to income ratio. This can improve your credit in the long term.

  6. Can taxes be discharged in bankruptcy? Sometimes. There are several qualifications to discharge taxes. Taxes would have to be at least 3 years old and filed in order to be discharged.

  7. Can I include lawsuits and judgments in my bankruptcy filing? Yes you can. Lawsuits and judgments from the credit cards or past due medical bills are dischargeable in a Chapter 7 or a chapter 13.

  8. What can I do if creditors are harassing me? Once retained, you can forward all of your creditor calls to our office. Some may still contact you, but we will let them know that you are represented by counsel, and they should cease all contact with you.   After we actually file the bankruptcy, they will contact our office.

  9. How soon after filing a bankruptcy can I get approved for a home/vehicle loan?
    It depends on several factors. Sometimes credit can be reestablished within months after the bankruptcy is discharged. Some lenders will approve home loans days after discharge.

  10. How long will a bankruptcy stay on my credit? 10 years, though you may be able to get approval for credit soon after a discharge.

  11. Will bankruptcy discharge my student loans?
    With rare exceptions, student loans are non-dischargeable.

  12. Can you stop a wage garnishment by filing a bankruptcy? Yes. It is one of the most popular reasons for filing a Chapter 7 bankruptcy. You can also stop a repossession or foreclosure through a bankruptcy.

  13. How quickly can a foreclosure be stopped? In the case of foreclosures and garnishments, time is of the essence and it is important to come in as soon as possible. In Georgia, foreclosure sales are conducted on the first Tuesday of the month on the Courthouse steps in every county in the state.

CHAPTER 11
Chapter 11 is the reorganization chapter available to businesses and individuals who have substantial assets and/or income, to restructure and repay their debts. Creditors vote on whether to accept or reject a plan of reorganization, which must be approved by the court.

While the debtor normally remains in control of the assets, the court can order the appointment of a trustee for cause, such as when the debtor does not get a plan approved in a reasonable amount of time, or fails to follow some of the rules, or breaks the law. In addition to the filing fee paid to the bankruptcy clerk, a quarterly fee is paid to the U.S. Trustee in all Chapter 11 cases. There is no debt limit under Chapter 11. Due to the expense and complexity of Chapter 11, the decision to file a Chapter 11 petition should be made in consultation with an attorney.

In a Chapter 11 case, a debtor's conference is held with the United States Trustee's staff before the creditors' meeting. At the debtor's conference, the United States Trustee will go over the responsibilities and restrictions on the debtor (called the "debtor-in-possession"), explain the quarterly fees and monthly operating reports, and generally discuss the financial situation of the debtor and the scope of the anticipated plan of reorganization. A disclosure statement must be filed with the plan and approved by the court before votes for and against the plan can be solicited. After the estate has been fully administered, the court enters a final decree closing the case. A Chapter 11 estate may be considered fully administered and closed before the payments required by the plan have been completed.

CHAPTER 13
Chapter 13 is a reorganization plan. It allows you to repay debts, such as missed house payments. This can be used to stop a foreclosure or repossession.

A debtor's involvement with the bankruptcy judge is usually very limited.   A chapter 13 debtor may only have to appear before the bankruptcy judge at a plan confirmation hearing. Usually, the only formal proceeding at which a debtor must appear is the meeting of creditors, which is usually held at the offices of the U.S. trustee. This meeting is informally called a "341 meeting."

In a Chapter 13 case, creditors are given an opportunity to object to the plan. If no objection is filed by creditors or the trustee, the plan may be confirmed as filed. Once the plan is confirmed, the trustee will distribute the proceeds of the debtor's plan payments to creditors until the debtor completes the plan or the court dismisses or converts the case. Upon completion of the Chapter 13 plan, the court will issue a discharge order, the trustee will prepare a final report, and the case will be closed.

In a Chapter 13 case, the court will order that the debtor is discharged of dischargeable debts after the debtor has completed all payments under the plan, or prior to plan completion, after notice and hearing, if the requirements of 11 U.S.C. § § 1228(b) or 1328(b) have been met.