Bankruptcy offers individuals and businesses an opportunity to get their finances in order by reducing or eliminating debt. For corporations and businesses, it could offer the chance to restructure debts and financial obligations with the goal to emerge from bankruptcy as a profitable venture. Individuals can use bankruptcy proceedings to stop foreclosure on a home or prevent creditors from seizing cars and other assets.
Bankruptcy law may appear to be complex and confusing to the average person, so choosing an attorney capable of helping you with trusted advice and skilled representation becomes a priority. Here is an overview of the types of bankruptcies and hints for choosing the right Atlanta bankruptcy lawyer to represent you.
Types of Bankruptcies
Bankruptcy is a proceeding governed by federal law, specifically Title 11 of the United States Code
, which is known as the Bankruptcy Code. The different types of bankruptcies are identified by their chapter numbers in the Bankruptcy Code, such as Chapter 7 or Chapter 11. Bankruptcy courts are located throughout the country as part of the federal court system. Bankruptcy cases in Atlanta and the rest of Fulton County are assigned to the U.S. Bankruptcy Court for the Northern District of Georgia
The three most commonly filed types of bankruptcies
Chapter 7 bankruptcy
, which is also referred to as liquidation, is when a court-appointed trustee takes control over the non-exempt assets of a debtor, sells them and uses the money realized through the sale to satisfy obligations owed to creditors. Any remaining debts not paid through this liquidation process are discharged by order of the bankruptcy court (with certain exceptions). Debtors must be qualified to file a Chapter 7 bankruptcy by proving their income does not exceed a specified amount. This qualification process to file is referred to as the means test. Chapter 7 bankruptcy usually involves individual debtors, but it can also be used by businesses and corporations, although a discharge will not then issue.
Chapter 11 bankruptcy
is usually reserved for corporations and businesses that need debt relief, although individuals with unusual circumstances may also file a chapter 11 case. Reorganization, the title given to a Chapter 11 bankruptcy, permits a debtor to file a plan of reorganization for approval by the bankruptcy court. The plan offered under reorganization can provide for partial repayment of debts with the discharge of the unpaid portion (sometimes with exceptions). It can also allow the debtor to terminate burdensome leases and contracts and restructure its business to continue profitable operations once it emerges from Chapter 11. A company going through Chapter 11 reorganization may continue to operate, protected from creditors, while the plan is being developed and presented, while not being subject to collection efforts by creditors due to a stay issued by the court. There is a process for conversion of Chapter 11 bankruptcy to Chapter 7 if it appears the plan will not permit the debtor to emerge from reorganization as a profitable entity.
Chapter 13 bankruptcy
is an adjustment of debts and is reserved for people with regular incomes who wish to repay at least part of the debt owed to creditors through a plan approved by the court. A debtor proposes a plan for the repayment of creditors. The repayment can take from three to five years. Unlike a Chapter 7 bankruptcy where a debtor loses non-exempt assets, a debtor in Chapter 13 retains all assets and is protected from creditors for as long as the debtor makes the payments under the approved plan. Debtors completing their payments as scheduled under a Chapter 13 plan have the remaining debt balances discharged.
There are many bankruptcy attorneys in Atlanta, but it is important to select one with a broad range of experience working with individuals and businesses during the bankruptcy process.
Choosing an Attorney For Your Bankruptcy
The Atlanta attorney you choose to represent you should be someone with demonstrated experience handling all types of debt-relief matters. Individuals contemplating filing for bankruptcy who own a business or have an interest in a closely-held business should consult with a lawyer with a wide range of experience representing businesses and individuals.
It is common for owners to personally guarantee loans and other financial obligations for their businesses because of lender requirements. Someone in that situation would benefit from the trusted advice of an Atlanta attorney with experience representing people in all types of bankruptcies to help the individual and the business decide on the best course of action, and the entity in need of counsel.
When speaking with a Georgia attorney for the first time about debt relief, keep in mind there is more to bankruptcy than merely filling out forms to submit to the court. You should ask about the experience the lawyer has handling contested matters related to bankruptcy on behalf of debtors and creditors, including:
Fraudulent transfer claims
Litigation related to relief from automatic stays
An attorney whose knowledge and skills relate to all types of bankruptcies and bankruptcy-related issues is capable of addressing a broader range of situations than someone who only focuses on one type of case.
Feel Comfortable With Your Choice
Whether you own a business that is owed money or are an individual or business overwhelmed by debt, you need to have confidence in your lawyer. Your Atlanta bankruptcy lawyer should be someone who listens to your questions and concerns and takes the time to address each of them with advice you can trust.