who are having problems paying their bills, or who are
threatened by a creditor with a lawsuit, a garnishment
or a seizure of property, often consider bankruptcy as a
solution to their problems.
The bankruptcy law is a federal law, which is
available to individuals throughout the United States.
Bankruptcy Courts are federal courts.
is a Chapter 7 Bankruptcy Case?
7 is what most people refer to as “straight
a Chapter 7, the debtor turns over all of his or her
assets to a Chapter 7 trustee.
The Chapter 7 trustee liquidates the assets and
distributes the proceeds to the debtor’s creditors.
By order of the Bankruptcy Court, the person is
then discharged from all debts.
all my debts be discharged?
debtor cannot discharge certain debts, including most
taxes, student loans, alimony and child support, debts
incurred through fraud or theft, and certain other types
of non-dischargeable debts.
I be able to retain any of my property?
Georgia each debtor can retain:
in real estate equity of your principal residence
(the amount of property value in excess of liens on
the real property)
Security benefits, unemployment compensation,
veteran benefits, disability benefits, and alimony;
in equity in vehicles;
items of household furnishings and wearing apparel,
up to a total value of $5,000;
in professional implements, books and tools of the
plus the unused portion of the principal residence
exception as a wildcard.
is other less common exemption rights.
In addition, if the creditor holding a lien on a
particular item of property consents, and the Bankruptcy
Court finds that is in your best interest, you can
retain additional property by reaffirming the debt to
the creditor and paying the creditors claim pursuant to
which you had previously agreed.
often can I file a Chapter 7 Bankruptcy case?
debtor can receive a discharge from his or her debts on
once every 6 years.
do I benefit from a Chapter 7 case?
filing the case your creditors are prohibited from
continuing suits against you or from attempting to
collect their claims against you and your property.
Rather, creditors must look solely to the
Bankruptcy Court and the assets within its control for
payment of their claims.
By filing the Chapter 7 case and obtaining a
discharge, you receive a total forgiveness of the
discharged debts and receive a “fresh start”.
are the differences between Chapter 7 and Chapter 13?
7 of the Bankruptcy Code is entitled to Liquidation and
as the name implied, generally requires the sale or
foreclosure of all property except property deemed to be
most instances, the Chapter 7 debtor is promptly
discharged from all or most pre-bankruptcy debts and
receives a fresh start on a new economic life.
This new economic life frequently begins with
only exempt assets.
13 is entitled “Adjustment of Debts of Individuals
with Regular Income” It is often called “wage
earner” or just “Chapter 13”.
Chapter 13 debtors pay all or part of their debts
through future income rather that through liquidation or
foreclosure of present assets.
Chapter 13 is available only to individuals with
regular income whose non-contingent; liquidated
unsecured debts are less than $250,000 and whose secured
debtors are less that $750,000.
Corporations and partnerships are not eligible
for Chapter 13. The
Chapter debtor’s income must be regular but can come
from such things as self-employment, pension, welfare or
does Chapter 13 work?
Chapter 13, the debtor presents a plan of debt
repayment, which is reviewed by the Chapter 13 trustee,
creditors and the Bankruptcy Court.
The plan must be filed in good faith, must
provide for payments there are feasible in light of the
debtors income and expenses and must also provide for
payments over time that are equal in value to the money
creditors would have received of the debtor had chosen
Chapter 7 liquidation instead of Chapter 13.
If a proper objection is made to the plan to the
plan, then the plan must also provide that, for a period
of three years, all of the debtor’s income above
reasonable expenses will be used to pay debts.
Chapter 13 plan is approved, all payments are made
through the Chapter 13 trustee’s office, and the
trustee is paid a commission.
Most plans must run at least three years and
cannot exceed five years. Chapter 13 provides that the debtor receives a discharge from
most pre-bankruptcy debt upon making the payments called
for by the plan.
are the disadvantages of Chapter 13?
remain under court supervision for the life of the plan,
up to five years. They
are not free to make new debts or sell assets without
who propose less than full payment of their unsecured
creditors will be required to live on a budget for the
life of the plan. The
plan payments may be deducted directly from the
debtor’s salary by order of the court. If
plan payments are not made, the case may be dismissed by
the court on the motion of the trustee or and creditor
may petition the court to have their property returned. Some courts require that you surrender recently purchased
property or luxury items before they will confirm a
Chapter 13 plan. Chapter
13 is a form of bankruptcy and will appear as such on
your credit report if you pay all your creditors in