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Bankruptcy Chapters
in Atlanta, Georgia
The United States Bankruptcy
Code outlines five different types of bankruptcy. Each is named after
the chapter of the Code that describes it.
Chapter
7 Bankruptcy:
Liquidation. Chapter 7 Bankruptcy, also called "straight bankruptcy,"
is the most commonly filed form of bankruptcy among individuals because
it allows the debtor to "wipe the slate clean" and start all
over again. In this type of bankruptcy a trustee collects the debtor's
nonexempt assets, reduces them to cash, and makes distributions to the
creditors based on bankruptcy law. In most Chapter 7 bankruptcy cases
the debtor receives a discharge releasing him or her from personal liability
for certain dischargeable debts. You should consider a Chapter 7 bankruptcy
if there is no hope in repaying any of your debts, there are no cosigners
involved, or if court action by creditors is imminent. Individuals or
businesses that wish to liquidate their assets and discontinue business
may also file under Chapter 7.
Chapter
13 Bankruptcy:
Adjustment of Debts of an Individual With Regular Income. Chapter 13 is
designed for an individual who has a regular source of income and desires
to pay his or her debts but is currently unable to do so. In some cases
Chapter 13 is preferable to Chapter 7 because it allows the debtor to
keep a valuable asset, such as a house. Chapter 13 bankruptcy is arranged
around a plan proposed by the debtor and approved by the Court for repaying
creditors over time, between three and five years. The debtor makes
payments to the creditors through the trustee, and the debtor is protected
from actions by creditors including lawsuits, wage garnishments, and
actual contact with the debtor for the life of the plan. When the plan
is completed any remaining debts are discharged. You may consider to
file a petition under Chapter 13 if you owe debts that are not dischargeable
under Chapter 7, such as taxes and child support, you have liens that
are larger than the value of the assets securing the debt, you have
years of unfiled taxes, you are behind or car or house payments, or
your assets are worth more than the available exemptions.
Chapter
11 Bankruptcy:
Reorganization. This type of bankruptcy is designed for commercial enterprises
that wish to continue business operations while repaying creditors through
a court-approved reorganization plan. Under Chapter 11 the debtor has
the right to file a plan of reorganization within 120 days after the
order for relief. The debtor must provide creditors with a disclosure
statement that allows the creditors to evaluate the plan, although the
Court has the final authority whether to approve or disapprove the reorganization
plan. The debtor has a number of options under Chapter 11 for returning
the business to profitability, including reducing debts by repaying
a portion of them and discharging others, discharging burdensome contracts
and leases, and rescaling operations of the business. At the end of
the life of the plan, the debtor usually has undergone a period of consolidation
and emerges with a reduced debt load and a reorganized business.
Chapter 12 Bankruptcy:
Adjustment of Debts of a Family Farmer with Regular Income. This type
of bankruptcy provides debt relief to family farmers with regular annual
income. Chapter 12 is very similar to Chapter 13 because in these bankruptcy
options the debtor proposes a plan of debt repayment over a period of
three to five years, and a trustee is assigned to the case whose responsibilities
include overseeing the bankruptcy process and disbursing payments to
the creditors. Chapter 12 bankruptcy allows a family farmer to continue
to operate the farm while the plan is being carried out.
Chapter 9 Bankruptcy:
Adjustment of Debts of Municipality. Only a municipality may file for
Chapter 9 bankruptcy--this includes cities, towns, villages, counties,
taxing districts, municipal utilities, and school districts. In this
type of bankruptcy the municipality is expected to reorganize and propose
a plan of repayment, similar to Chapter 11 bankruptcy.
Important Bankruptcy
Information
Bankruptcy filings are public records. A bankruptcy will stay on your
credit report for ten years. According to the law, any employer is prohibited
from discriminating against you because you filed for bankruptcy.
For
more information about which type of bankruptcy is right for you, contact
a Atlanta, Georgia Bankruptcy Lawyer.
