King and King Bankruptcy Attorneys, Atlanta Georgia
What Are the Different Types of Bankruptcy I can File In Georgia?
Bankruptcy in the United States is federal: all bankruptcy cases are handled through the federal court system. Bankruptcy currently consists of 9 chapters, which are assigned numbers between 1 and 15 for administrative purposes. The vast majority of bankruptcies in the United States are filed under three chapters: Chapter 7, Chapter 11, and Chapter 13.
A Chapter 7 bankruptcy is available to both individuals and businesses in Georgia. A Chapter 7 bankruptcy is a liquidation process.
- When an individual files under Chapter 7 bankruptcy in Georgia, the bankruptcy trustee oversees the Chapter 7 process. The bankruptcy process is there to help, so exemptions allow the individual to keep thinks you need to lead a normal life: clothing, household goods and furniture, motor vehicles, and retirement funds are all examples of categories of assets that can be declared exempt. In many cases, debtors with homes are able to keep their homes. In many cases the debtor does not have any non-exempt property at all, so the creditors receive nothing.
- When a business files under Chapter 7 bankruptcy in Georgia, the business is literally liquidated: it goes out of business permanently. The trustee sells off all of the filer’s assets, if any, and the proceeds go to pay the creditors. At the conclusion of the bankruptcy process, the business no longer exists as a legal entity.
A Chapter 11 bankruptcy in Georgia involves reorganization. Chapter 11 is primarily used by businesses, although some high-income or high-asset individuals may be required to file under Chapter 11 in rare cases. Chapter 11 allows businesses to continue operating during and after the bankruptcy process, although not all Chapter 11 filers choose to remain in business. A Chapter 11 filer is allowed to develop its own plan for reorganization and partial or full repayment of creditors, subject to the approval of the trustee.
A Chapter 13bankruptcy in Georgia is available only to individuals. Chapter 13 involves reorganization, rather than asset liquidation. The debtor proposes a plan to fully or partially repay his or her creditors over time, subject to the approval of the bankruptcy trustee. Chapter 13 bankruptcies last for either 3 or 5 years, depending on the financial status of the filer. As with the other forms of bankruptcy, individual Chapter 13 filers are entitled to claim exemptions.
Other Bankruptcy Chapters
The other forms of bankruptcy in Georgia are rare. Chapter 9 governs debt restructuring by municipalities. Chapter 12 is a reorganization chapter that is available only to family farms and commercial fishermen. Chapter 15 was added to the bankruptcy code in 2005 and addresses international bankruptcies.
If you are considering bankruptcy in Georgia, call King and King attorneys in Atlanta for a free consultation. 404-524-6400
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