Stone Mountain, GA
877.541.5570
Licensed in New York & Georgia
Share

Chapter 7 and Chapter 11

Bankruptcy

 

Creditor Rights and Lifts From Stay

We represent creditors in all phases of bankruptcy proceedings, including pre-bankruptcy workouts and negotiations concerning the use of  collateral.  The goal of this comprehensive practice  is to add value to each client's business by converting non-performing assets into performing assets as quickly, efficiently and cost-effectively as possible.

When representing creditors, we aggressively protect the interests of each client through pre-bankruptcy planning, which involves negotiating a debtor's right to use collateral, and when necessary, seeking orders for adequate protection to preserve the value of a client's collateral.  We are experienced in all facets of automatic stay litigation, permitting the prompt continuation of any foreclosure or collection efforts. We also litigate preference, fraudulent conveyance, and objection to discharge actions. We are known for our ability to find creative solutions to legal, business and financial challenges for both creditors and debtors.

 

Debtors

Chapter 7 bankruptcy protection is designed to eliminate most of the unsecured debts of an individual or business.  Unsecured debt is an obligation that does not have specific property as collateral, such as a house or a car. The process is often referred to as a "liquidation bankruptcy" because the property and/or assets of the debtor are sold in order to pay off as much of the debt as possible. Any debt that remains is then eliminated or discharged. If you are unable to pay your debts and need a fresh start, our experienced bankruptcy attorneys can help you explore your options.

Who is eligible for Chapter 7 bankruptcy?

In order to be eligible to file a Chapter 7 bankruptcy, your income must be lower than the median income in your state. If you earn more than that amount, you must pass a means test and demonstrate that you do not have enough disposable income to pay your debts.

Who is ineligible for Chapter 7 Bankruptcy?

You cannot file for Chapter 7 bankruptcy under the following circumstances:

  • A previous debt was discharged within the past eight years under Chapter 7
  • A previous debt was discharged within the past six years under Chapter 13
  • You attempted to defraud creditors or the bankruptcy court
  • You failed to attend credit counseling

Debts That May Be Eliminated

In a Chapter 7 bankruptcy, debt that is eliminated includes:

  • Credit card debts
  • Medical bills
  • Lawsuit debts/civil judgments (including personal injury)
  • Personal loans

In some cases, this form of bankruptcy may eliminate tax debt (for a tax period that is at least 3 years old), as well as penalties and interest on other tax debt. Other debts, however, such as student loans, spousal maintenance (alimony) and child support, and criminal fines cannot be discharged.

Property Exemptions

Some types of property are protected, or exempt, from being sold to pay off debts including residential real estate, automobiles and certain personal property such as furniture and clothing, depending on the state in which you live. Property that is not exempt includes cash, bank accounts, stocks and bonds, and vacation homes.

How to File for Chapter 7 Bankruptcy

Prior to filing a Chapter 7 bankruptcy, you must attend credit counseling with an agency approved by a bankruptcy trustee. Once the course is completed, you can file for bankruptcy in a local bankruptcy court. Information about your income, debt, expenditures, secured and unsecured debt, the sale of prior property, and a list of exempt property must be included in the petition.

As soon as your bankruptcy petition is filed, a court order, known as an automatic stay, immediately goes into effect that stops creditors from debt collection activities. Creditors are also barred from proceeding with repossessions, foreclosures, garnishments, and filing lawsuits unless permission is obtained from the bankruptcy court. The automatic stay remains in effect until the bankruptcy is discharged.

After the petition is filed, a trustee will be appointed and you will be required to attend a meeting of creditors referred to as a "341 meeting."  Creditors are entitled to appear and ask questions regarding your financial situation and property. In most cases, however, creditors do not attend. The trustee will preside at this meeting and question you about the petition.

Filing for a Chapter 7 bankruptcy requires serious consideration since you may lose some of your  property and  your credit rating will be damaged. This form of bankruptcy, however, may provide you with a chance to start over.

If you are facing debts that cannot be paid off, our experienced attorneys can help you navigate the process. Call our office today for a free evaluation of your case.

 

Chapter 11 Bankruptcy- Small Business

A small business struggling with a heavy debt burden may be able to seek relief by filing for bankruptcy. Depending on the circumstances, a business debtor can file either a Chapter 11 or Chapter 7 petition. A Chapter 11 bankruptcy is designed to allow a business to reorganize its debts and return to profitability. If the future prospects for the business are not good and the debts cannot be reorganized, the alternative is to liquidate the business through a Chapter 7 bankruptcy. In either case, it is essential to engage the services of an experienced business bankruptcy attorney.

Chapter 11 bankruptcy is one in which a small business has the opportunity to reorganize its debts while continuing to operate. A small business debtor is one that is engaged in business or other commercial activities and owes no more than $2,490,925 in total claims at the time the bankruptcy petition is filed. A court-appointed trustee will oversee the bankruptcy.

In this form of bankruptcy, the business files a plan for paying its debts over a set period of time and must also propose a plan to return to profitability. In addition, the bankruptcy petition must include a recent balance sheet, statement of operations, cash flow statement and a federal tax return. A plan that is deemed to be fair and equitable by the court will be approved.

While Chapter 11 bankruptcy may enable a small business to restructure its debts, regain profitability and continue to operate, filing Chapter 11 can be a lengthy and expensive process. Moreover, many Chapter 11 bankruptcies are not successful and are ultimately dismissed by the court. If the court determines the business does not have a chance to become profitable, the court will convert the bankruptcy to a Chapter 7 and the business will be liquidated.

Chapter 7 Bankruptcy-Small Business

Chapter 7 bankruptcy is referred to as liquidation and is typically used when the business' debt is overwhelming and it is unlikely that that it will be able to return to profitability. When the petition is filed, an automatic stay goes into effect which stops collection activities by creditors. A trustee is appointed who is responsible for selling the small business debtor's assets to pay off the creditors.

For a sole proprietor, a Chapter 7 personal bankruptcy can discharge both personal and business debts. If a partnership files a Chapter 7, the business will be liquidated and the assets will be sold; however, any partner who is personally liable for any of the business debt may also need to file for personal bankruptcy. If the business is set up as a Limited Liability Company or Corporation, the debts cannot be discharged, the assets will be sold and the business will cease operating.

There are a number of factors involved in deciding whether a small business should file for bankruptcy, including the type and amount of debt involved, whether or not it wants to continue operating, as well as its prospects for regaining profitability. If you own a small business and are considering bankruptcy, call our firm to discuss the options available to you.


Real Estate



© 2018 Holmes Legal Group | Disclaimer
1298 Rockbridge Road, Suite D, Stone Mountain, GA 30087
| Phone: 877-541-5570

Real Estate | Business | Estates and Trusts | Tax | Bankruptcy | Significant Cases | About Us

FacebookTwitterLinked-In Company

Law Firm Website Design by
Amicus Creative