Questions About Bankruptcy?
Bankruptcy is a legal process designed to help people who can no longer pay their debts to get a fresh start. Under the protection of the federal bankruptcy court, individuals and businesses can discharge some debts or establish a workable repayment plan. Generally, there are two types of bankruptcy: those involving liquidation and those involving reorganization. Bankruptcy begins when the debtor files a petition with the bankruptcy court. Such a petition can be filed by one person, spouses, or a business entity.
Different Types of Bankruptcy
The U.S. Bankruptcy Code outlines the rules that govern all bankruptcy cases handled in federal courts. For this reason, each type of bankruptcy is referred to by its chapter number in that code, for example, Chapter 11 or Chapter 13. If you are thinking about filing for some type of bankruptcy, or another kind of debt relief, it is essential to have a capable bankruptcy attorney at your side to guide you through the complex, often confusing, aspects of such financial restructuring.
You should be aware that in order to qualify for either Chapter 7 or Chapter 13 bankruptcy, you must demonstrate that you have received credit counseling during the 6-month period before you file from an agency approved by the U.S. Trustee in Georgia.
Chapter 7 Bankruptcy is typically filed by individuals who cannot repay their debts. Chapter 7 Bankruptcy allows a debtor to make a fresh start. The debtor may retain exempt assets including a up to $25,150 of equity in a home for individuals and $50,300 for couples filing jointly. Retirement savings, cars and cash may also be exempt.
Frequently, Chapter 7 is filed by those about to be sued by creditors, or just overwhelmed by their debt. Businesses that are ready to close up shop and liquidate their assets may also file Chapter 7 bankruptcy. It should be remembered that some debts cannot be discharged, even under Chapter 7 bankruptcy. These include some taxes and child support.
Workout Your Debt with a Plan
Chapter 13 bankruptcy was established to accommodate individuals who want to pay their debts but are presently unable to do so, in spite of the fact that they have a regular source of income. By filing Chapter 13 with the help of a skilled bankruptcy attorney, they present a viable plan to the court that must be approved before it can be implemented. The plan demonstrates how they propose to pay their creditors over a reasonable period of time — between 3 to 5 years. If their plan is approved, the debtor will make payments to the creditors through a trustee. During the period of time the approved plan is in effect, the debtor is protected from lawsuits, wage garnishments, and other harassments by creditors. Once the plan is completed, any remaining debts are discharged.
Business & High Net Worth Individuals
Chapter 11 bankruptcy is a way for commercial enterprises to reorganize their debt while they continue to do business or liquidate the business and close it. In Chapter 11, businesses can repay creditors under a court-approved plan of reorganization.
The Chapter 11 Plan requires court approval, and the debtor is obligated to provide all creditors with a disclosure statement to help them understand the businesses financial circumstances and evaluate the plan.
The creditors may form a committee to review the debtor’s business and plan. The committee investigates the debtor's conduct and operation of the business, consults with the debtor in possession on the administration of the case, and participates in formulating the plan.
Businesses that file for Chapter 11 may return to financial stability by repaying a portion of some debts and discharging others, discharging contracts and leases that have become a burden, or downsizing. In many cases, Chapter 11 bankruptcy enables business debtors to have reduced debt and profitable, reorganized business.
If you are a high net worth individual struggling with debt, Chapter 11 bankruptcy for high net worth individuals can be an option. With the help of an experienced bankruptcy lawyer, you can make arrangements with your creditors and get your financial situation in order.
Difference Between Bankruptcy for Businesses and Individuals
The process for filing Chapter 11 bankruptcy for high net worth individuals is similar to business filings, but there are some differences. Call Ernest G. Ianetti today to discuss your situation.