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Chapter 7 Personal Bankruptcy

Chapter 7 Bankruptcy, or “liquidation/straight” bankruptcy, is highly filed in the United States because it remains one of the quickest ways to relieve unsecured debts. Credit card debt, utility bills, medical bills, some types of personal loans, IRS debt, payday loans, and wage garnishments are some of the debts Chapter 7 can reduce within months. Typically, Chapter 7 candidates have negligible income, have a large amount of unsecured debt, and own few large assets.

To file a Chapter 7, a means test, credit counseling, and debtor education requirements must all be fulfilled. A means test is to evaluate from results whether you are eligible for a Chapter 7 based on your income. This test composes of two parts, and you only need to pass one to gain qualification. The median income part compares your average household income to the median income in your region, and yours must be below the median to pass. The disposable income part is that you are eligible to file for a Chapter 7 if your disposable income is less than one hundred dollars a month. Besides a means test, credit counseling assures basic training on how to balance your credit, and debtor education resembles much a financial management course.

When filing a Chapter 7, there are several options you can choose from. You can redeem a loan, which means that as long as you can pay your creditor a certain portion of the debt, the US bankruptcy code will allow for the remaining portion to be discharged. Or you can reaffirm your loan, which means that you continue to pay portions of your balance during your bankruptcy filing. Finally, there is also always the option to surrender to creditors to discharge the debt if you have difficult making the payments in time or the loan is worth more than the equity value.

Chapter 13 Personal Bankruptcy

A Chapter 13 Personal Bankruptcy, or “Wage Earners Plan”, plans an organized schedule for the debtor to catch back up with his payments while still securing his valued assets. This plan is created to map out how the debtor plans to repay the creditor over a certain amount of time, and this plan is presented before a bankruptcy judge for approval. After the Bankruptcy Court’s approval, a Chapter 13 trustee is elected who is responsible to facilitate the process of gathering the debtor’s payments and allocating it amongst the creditors.

A Chapter 13 can only be filed by those who have an income, a secured debt not exceeding $1,010,650, and an unsecured debt not exceeding $336,900. If the debtor’s income is lower than the region’s median income, then the plan is typically for three years, but if the personal income is higher than the median income than that time span usually encompasses five years. US law forbids any payment plan to exceed five years.

Several advantages allow a Chapter 13 to be preferable to a Chapter 7 of liquidation. First and foremost, debtors can assuredly keep their houses from foreclosure. However, they must still make all mortgage payments in a timely fashion. Secondly, individuals can rearrange secured debts so that they can plan them out over the time span of the Chapter 13 plan, which may even reduce payments. Lastly, debtors can be protected from direct contact with creditors because of the mediator role entrusted to the Chapter 13 trustee, who is able to assist and provide guidance throughout the process.

Chapter 11 Personal Bankruptcy

Although Chapter 11 or “reorganization bankruptcy” is typically filed for businesses and organizations, there are certain cases where individuals file for it too. By filing a personal Chapter 11, an individual may be able to reorganize a substantial amount of personal debt or restructure his/her debts while operating a small business. Another option to consider for these individuals is the Chapter 13 bankruptcy, which share the similarity that both revolve around creating a new organizational plan.

Individuals who file for Chapter 11 are able to hold onto their personal assets while seeking a solution to repay creditors. There people are often labeled “debtors in possession” because they are able to protect valuables while filing bankruptcy. A chapter 11 plan may include future earnings for the filer and usually only encompass around 3-5 years just like a Chapter 13. However, the individual must receive credit counseling prior to filing and there is a limitation on how many times a person can file.

Normally, a personal filing for Chapter 11 means that the personal household exceeds $336,900 in unsecured liquidated debts or exceeds $1,010,650 in secured liquidated debts, which is why they cannot file for a Chapter 13. To file, one must submit a disclosure statement and a reorganization plan to the court. Once the court approves, the creditors and debtors must adhere to the plans’ regulations; the plan takes priority over anything else established in the past.

Georgia Areas We Serve

Coleman Legal Group, LLC handles cases in the following cities and communities: Atlanta, Alpharetta, Roswell, Johns Creek, Milton, Cumming, Marietta, Woodstock, Kennesaw, Gainseville, Midtown, Norcross, Lawrenceville, Kennesaw, Duluth, Buckhead, Dunwoody, Vinings, and Smyrna.

Coleman Legal Group, LLC’s Georgia lawyers practice in the areas of Divorce, Family Law, Estates, Trusts, Wills Probate, Bankruptcy, Immigration and Business Law. We have offices conveniently located at:

Alpharetta Georgia
North Point Park
5755 North Point Parkway
Suite 52
Alpharetta, GA 30022
Phone: 770-408-0477 | Map

Atlanta Georgia
Colony Square
1201 Peachtree Street, 400
Colony Square, Suite 200
Atlanta, GA 30361
Phone: 770-408-0477 | Map

Sandy Springs
1200 Abernathy Road
Building 600
Northpark Town Center
Atlanta, GA 30328
Phone: 770-408-0477 | Map

Cumming Georgia
The Avenue Forsyth
410 Peachtree Parkway
Building 400, Suite 4245
Cumming, GA 30041
Phone: 770-408-0477 | Map

Johns Creek
Duluth Georgia

11555 Medlock Bridge Rd
Suite 100
Johns Creek, GA 30097
Phone: 770-609-1247 | Map

Duluth Georgia

2180 Satellite Boulevard
Suite 400
Duluth, GA 30097
Phone: 770-609-1247 | Map

Kennesaw Georgia
TownPark Center
125 TownPark Drive
Suite 300
Kennesaw, GA 30144
Phone: 770-609-1247 | Map

Atlanta Georgia Office
659 Auburn Avenue Northeast
Suite 117
Atlanta, GA 30312
Phone: 770-609-1247 | Map

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