Bankruptcy
Sorting out your debt payment and bankruptcy options
Your stomach clenches each time you review your personal and/or business finances. You cannot pay your bills and you avoid picking up the telephone, because you know it is the collection agency calling you. You see no way out but to declare bankruptcy. What does that even mean, really? What obligations do you have to your creditors? What is the difference between Chapter 7, Chapter 11, and Chapter 13 bankruptcies (and is there a Chapter 8, 9, 10, and 12 you should know about)? Your stomach clenches even more and combines with a throbbing headache as your mind clouds thinking about all this. You would reach for a cup of coffee if you could afford one.
But, you can reach out to the attorneys at the Palazzola Law Firm. We evaluate your specific situation and discuss the options with your current and future best interests in mind.
Consumer options
Bankruptcy does not get rid of all debts. You will probably be held accountable for the following:
- Alimony & child support
- Drunk driving judgments
- Criminal fines or restitution
- Debts incurred by fraud or intentional wrongdoing
- Back taxes under three years old
- Student loans
- Recent large purchases of more than $550 for luxury goods within 90 days of filing
Under Georgia law, you can file under one of two ways:
Get a fresh start—Chapter 7 bankruptcy
The simplest and most straightforward form of bankruptcy, Chapter 7 wipes out all your debt except those listed above. Your nonexempt assets—those that can be used to pay off your debts—are turned over to a trustee who liquidates or sells them to pay your creditors. Most of your remaining debts are discharged or canceled.
Chapter 7 can be a viable option for you if the following conditions exist:
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Pay your debts with a structured repayment plan—Chapter 13 bankruptcy
Chapter 13 gives you some breathing room to pay your debts and is a reasonable option when you—
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When you file for Chapter 13, you must also include a proposed payment plan that provides payment of all priority claims, such as taxes, in full. The bankruptcy court appoints a trustee, who reviews your plan. Your creditors then receive your plan and have the right to accept or reject it. If approved, you make monthly payments to the bankruptcy trustee, who distributes the funds to your creditors according to your plan.
If unable to complete the plan, the Palazzola Law Firm can help you understand your alternatives.
Commercial options
Corporations and partnerships can file for Chapter 7. Sole proprietorships can file for Chapter 13. Other businesses can file for Chapter 11.
Pay commercial debts and continue business operations—Chapter 11
Under Chapter 11, your commercial enterprise repays creditors through a court-approved plan of reorganization, allowing you to regain profitability. Bankruptcy court approves or rejects your plan.
