Chapter 7 Bankruptcy AtlantaThere are various kinds of bankruptcy cases, referred to by the number of the U.S. Code that defines them. A Chapter 7 Bankruptcy is a case filed under 11 U.S.C. 701, and is a means by which an individual can get relief from most of his/her/their debt obligations by discharging most or all of their existing debt. Simply stated, the person or couple filing for Chapter 7, referred to as the Debtor, is allowed to keep certain property by claiming the property as “exempt” according to a schedule of exemptions. Any property which is not allowed to be exempted can be liquidated or sold by a trustee appointed to oversee the case. If you disclose all of your assets and debts, complete credit counseling and financial management courses, the court will enter an order discharging your eligible debts.

Other chapters in bankruptcy include Chapter 11, which is a reorganization process for businesses or individuals engaged in business, and Chapter 13, which is a reorganization that provides for repayment of consumer debts. There are other, less common kinds of bankruptcy, such as Chapter 12 for family farmers, Chapter 9 for municipalities, and Chapter 15 for international cases.

Under amendments to the bankruptcy code effective in 2005, an individual or couple whose debts are primarily consumer debts and whose income is less than the average income in the county where they reside may be a debtor in Chapter 7. There is a “means test” to determine if you qualify. If your income is more than the average income where you live but you have exceptional and necessary ongoing expenses, you may still qualify to be a Chapter 7 debtor. If your debts are primarily business obligations, rather than consumer debts, the means test does not apply and you may be eligible to be a Chapter 7 debtor regardless of your income.

While corporations and limited liability companies may be eligible for filing Chapter 7 bankruptcy, they will not receive a discharge of their debts, and Chapter 7 serves a very limited purpose for such entities.

Everything that you own or have an interest in at the time you file becomes property of the bankruptcy estate. You may claim some or all of this property as being “exempt”. This is one of the few code sections that vary from state to state. In Georgia you can retain your interest in some, or maybe all, of your property by using certain exemptions to keep the property out of the bankruptcy estate. For example, you can exempt a certain amount of equity in your home, your car, your household goods, tools of your trade, and even some of your cash or bank deposits. If you have an IRA or federally approved retirement plan, you can keep the full amount.

Any property that has a value greater than the amount of any liens plus the amount that you are allowed to claim as exempt may be liquidated by the trustee and the proceeds paid to creditors. By way of example, if your house is worth more than your mortgages, and exemptions combined you could lose your home; if you own cars that are worth more than the debt and exemptions you may lose them; if someone owes you money, the trustee can collect and you may get nothing. Some of the more unusual items that trustees have sold include wine collections, baseball cards, civil war memorabilia, and artwork.

Credit Counseling is an interactive process in which you disclose information concerning your debt, your assets, your income, and which is intended to educate you about the bankruptcy process. As a result of the bankruptcy amendments of 2005, you must complete an approved Credit Counseling program before you file you bankruptcy case. There is a second prong to the counseling, called the Financial Management course, which you must complete after your case is filed in order to qualify for a discharge of your debts. Both the Credit Counseling and Financial Management courses may be taken online in the privacy of your home. There is a fee for taking these courses, and a list of approved providers will be given to you so you may choose which course to take.

Every debtor must attend a meeting of creditors at the federal courthouse approximately one month after the case is filed. The Chapter 7 trustee appointed to your case will preside at the meeting of creditors. The Chapter 7 trustee is not a judge, so technically, this is not a court hearing. However, you may be required to attend court if creditors object to your being granted a discharge of their claims or a discharge of all claims. There are other instances where you might have to appear in court, but they are infrequent.

When the Bankruptcy Court enters an order discharging your debts, the effect is to void any judgment already entered against you and to enjoin creditors from trying to collect any debt that was discharged. However, a discharge does not automatically void the liens on your property (mortgages, security interests, judgment liens, tax liens, etc.) which will remain as liens on your property unless the Bankruptcy Court enters an order specifically voiding the liens.

If the petition, schedules, or statement of financial affairs that you sign and file with the Bankruptcy Court are inaccurate, it is possible that the Bankruptcy Court may deny you a discharge. If the Bankruptcy Court determines that the Chapter 7 case was filed in bad faith, your discharge may likewise be denied. Furthermore, if a particular claim is the result of a false financial statement, if you took on more debt knowing you were going to file for bankruptcy, or if a claim arises from a willful act of misconduct, the Bankruptcy Court may enter an order excluding that particular claim from your general discharge.

If you owe income taxes that are several years old, you may be able to discharge income taxes, penalties and interest. If the taxing authority filed a lien against your property, the lien will remain and the taxing authority may collect when the property is sold. If you were an officer in a business that failed to pay withholding taxes of its employees, or failed to pay sales taxes that were collected, you cannot discharge these “trust fund” taxes.

You are required to list every person to whom you owe money or who has a claim of any kind against you. Certain debts, such as mortgages and car loans may be “reaffirmed” and the effect of reaffirmation is to remove that debt from your bankruptcy case. Even if you do not reaffirm a debt, there is nothing to prevent you from repaying friends, family, or creditors to whom you owe money after the entry of an order discharging your debts, should you wish to do so. However, this is a one-way street, and the friend, family members or creditors can take no affirmative measures to collect from you.

Generally, student loans cannot be discharged. In order to discharge student loans you must demonstrate a hardship, and the threshold for proving a hardship discharge is very high.

You may keep your home if you are substantially current on your mortgage when you file, or if the lender agrees to modify the terms of your loan, and if the value of your home is not more than all of the mortgages and your allowed exemption combined. Likewise, if your car has a loan, and if the value of the car does not exceed the value of the debt plus the amount you can claim as exempt, you may be able to reaffirm the car loan and keep the car.

If you knowingly leave a debt off the schedules that you file with the court there may be serious repercussions, including the denial of a discharge. If you simply forget to list a debt, the debt may still be discharged if the trustee determines that there will be no distributions to your creditors. If the trustee liquidates assets and makes disbursements to your creditors, and you forgot to list a claim, the claim will not be discharged.

You can ask the court to dismiss your case, but you have no right to dismiss the case. Many requests for dismissal are granted. If the court won’t allow you to dismiss the case, you may choose to convert the case to Chapter 13 or Chapter 11 if it is better for you to do so.

The best case scenario is that the case will take three months from start to finish. The Meeting of Creditors takes place about a month after you file, and the trustee and creditors have 60 days from the Meeting of Creditors to file objections. If no objections are filed, and if you have completed your Financial Management course, the Bankruptcy Court may enter an order discharging your debts. Keep in mind that if the trustee decides to liquidate assets the case could remain open for years after your debts are discharged. Your involvement would be very limited at that point.

After consulting with one of our attorneys, you will be quoted a flat fee for legal services. The fee is determined by the complexity of your case, and must be paid in full before your case is filed. You will also be required to pre-pay the court filing fee of $306.00. If objections to discharge ar filed, if it becomes necessary to file motions to void liens or to determine dischargeability of certain debt, or if creditors demand additional deposition or examination, there will be additional charges for such services. More than ninety percent of the Chapter 7 cases are covered by the flat fee. A schedule of fees will be set out on a fee agreement with this firm.

In order to file your Chapter 7 bankruptcy case, you must provide information and documents concerning all of your assets, liabilities, and financial affairs. You may get the process started by going to www.stopmybills.com, entering the firm name of “Danowitzlegal” and the filling out the information requested. After doing this, you will need to provide copies of the supporting documents to the lawyer assigned to your case. You must also complete the Credit Counseling course before your case if filed. You will meet with your lawyer to review and sign the petition, schedules, and statements, to discuss any issues that are anticipated, and to pay your retainer.