All items from Atlanta Bankruptcy Attorney Blog

Chapter 11 is most often associated with business bankruptcies; however, it is also a necessity for a few high-income individuals who have debt limits that surpass the Chapter 13 statutory requirements. You see, if you have more than approximately $360,000 (this number increases every now and then) in unsecured debts or $1.1 million in secured debts, you are not qualified to file a Chapter 13. Antiquated? Of course, but what else do you expect from Congress?
While Chapter 11 has it’s own pitfalls (significantly higher attorneys’ fees for one), it offers a much higher degree of control by the filer. When you file a Chapter 13, you are proposing a plan to repay a portion of your debts. This plan must be overseen by the Chapter 13 trustee assigned to your case. The Chapter 13 trustee is there to ensure that creditors are being treated fairly, among other things, but it simply adds another person to deal with in attempting to get a plan confirmed. If you file a Chapter 11, you still propose a plan of reorganization, but there is no Chapter 13 trustee to object to your plan.
In a Chapter 13 plan, your plan payments are determined by three tests, dependent upon the facts in each case.  Your payment is typically based on your disposable income after subtracting your income from your reasonably necessary expenses on Schedule J.  If you do not propose to pay creditors all your disposable income over a 5-year period, your plan will probably not be confirmed.



Posted 1 year 38 weeks ago

Filing any type of bankruptcy will require you to attend a 341 meeting – often referred to as the meeting of creditors, though creditors rarely make an appearance.  If you filed a Chapter 7 or Chapter 13 bankruptcy, the trustee administering your case will conduct the hearing. If you file a Chapter 11, the U.S. Trustee, or at least one of her staff attorneys, will be conducting the hearing.  To prove that you are who you say you are, the U.S. Trustee requires two forms of identification, one of which is a government issued paper with your social security card on it. Unfortunately, that little wallet sized card is often misplaced or lost prior to the hearing, so in a pinch, a W-2 or a pay stub from your employer will work, though a self-prepared tax return will not, as that was not issued from a third-party. 



Posted 1 year 44 weeks ago

What Happens in a Chapter 7?
Clients often ask me what happens if they get a big raise or a start a business that does really well after filing a  Chapter 7 in Atlanta. Chapter 7 bankruptcy is literally a snap-shot in time of your finances at the time of the filing of your petition. The purpose of bankruptcy is to give you a new lease on life – a fresh start on your finances free from bill problems in the future. The Supreme Court has stated this as recently as 2007:  “The principal purpose of the Bankruptcy Code is to grant a ‘fresh start’ to the ‘honest but unfortunate debtor.”
What this essentially means is that whatever money or property you obtain after bankruptcy belongs to you.  When you file, a bankruptcy estate is created, and all property of the Debtor on the date of filing  becomes property of the estate to be administered by the Chapter 7 trustee.  Most cases are called “no-asset” cases, meaning that the debtor is able to exempt under Georgia law all property of any value from the reach of the Chapter 7 trustee.  This means that any weddings rings, musical instruments, household goods, clothes, etc. will be safe from liquidation.



Posted 1 year 45 weeks ago

This is a little bit more advanced than the usual topic, but I had a client come in who put her personal residence in a qualified personal residence trust.  Unfortunately, she got behind on her second mortgage, and the house had a moderate amount of equity in it; therefore, the second mortgage holder had no problem filing a foreclosure action against her.
She paid me a visit in hopes of filing a Chapter 13 because she’s heard it can halt the foreclosure process. This is true: for property of the Debtor.  When she transferred her residence years ago into a qualified personal residence trust in an attempt to shield herself from personal liability, she also took away the biggest weapon she had against a home foreclosure.  You see, when you file bankruptcy, a statutory beast called the automatic stay creates a literal “stay” against all creditor collection activity against property owned by the Debtor or the bankruptcy estate. In this situation, the woman did not own the property; the QPRT did! As a result, even if she filed bankruptcy, the automatic stay would not have prevented the second mortgage lender from foreclosing on her residence since she did not technically own the residence.  And for those of you who think a possessory interest (having mere possession of the property) is enough, it probably is not.



Posted 1 year 46 weeks ago

The answer to this question may surprise you.  You actually do not have to be destitute to file bankruptcy. Ideally, my clients would come to me before the bottom drops out from under them, but many wait until they are almost a year behind on their mortgage payments or a car has already been repossessed before seeking counsel from a bankruptcy attorney.  In fact, you can even file a Chapter 7 case and have whatever non-exempt property (property that is not capable of being protected from the Chapter 7 trustee and our creditors) you own liquidated by the Chapter 7 trustee administering your case to pay your unsecured creditors. I have seen creditors get paid out at 100% in Chapter 7 cases, though this is rare. Most are “no-asset” cases in which creditors receive nothing.
In Chapter 13 cases, you will have the option to pay back some of your debts over a 3-5 year period.  In some cases, unsecured creditors will receive nothing, while in others, all of your creditors will receive 100% of what you owe them, only with no fees and interest accruing during the plan period.
Chapter 11 is another animal entirely, as businesses need sufficient cash reserves to be able to whether a reorganization effort through bankruptcy.  Individuals filing for Chapter 11 should take this same advice to heart, as Chapter 11 fees are much higher and cannot be paid out over the life of a plan like in a Chapter 13.



Posted 1 year 48 weeks ago

Chapter 7 and Chapter 13 of the bankruptcy code have given millions of people the financial freedom they needed to get on with their lives without a crushing debt load. There seems to be a lot of confusion regarding which chapter is right for who, so I’ve written this post as a quick reference for anyone who cares to know.
Chapter 7
Chapter 7 is often referred to as a “complete liquidation”, but this is not entirely accurate. The bankruptcy code provides that debtors are able to save certain property according to certain state law exemptions. What this means is that Georgia state law allows you to prevent certain property from being liquidated to pay off yours creditors.  The Chapter 7 Trustee is the individual tasked with administering your case and liquidating whatever non-exempt assets you have to pay off your creditors.



Posted 1 year 49 weeks ago

You can absolutely keep your 401k if you file bankruptcy in Atlanta, Georgia.  This is one of the most common questions I receive when clients schedule an appointment with me. Many people thing that the bankruptcy court (or more appropriately, the trustee assigned to your case) will liquidate all your assets under a Chapter 7 bankruptcy.  This is simply not the case.  Georgia has specific laws that protect certain assets of the debtor from being taken by the Chapter 7 trustee or creditors.
For instance, under Georgia bankruptcy law (specifically, the Georgia law specific to exempt property in bankruptcy), the Debtor may shield from creditors up to $23,500 of equity in his or her personal residence, $3,500 in a car, and $5,000 in household goods, among other things.
When it comes to 401k retirement plans, you may exempt the entire amount of the holdings in your 401k.  This is one of the most debtor friendly laws in the state of Georgia.  It just makes sense. How can you expect someone to get back on their feet if their retirement is up for grabs by creditors?
Section 44-13-100 of the Georgia Code states,
“Exemptions for purposes of bankruptcy and intestate insolvent estates



Posted 2 years 2 weeks ago

Many small business owners will have a family member or close friend co-sign for them on a business loan or the purchase of a major asset, such as a house or car.  If you fall behind on the payments and decide that bankruptcy is the right option for you, be aware that filing bankruptcy will only wipe out YOUR personal liability on the debt.  If your parents or friends provided their guarantee to a creditor that they would pay the debt if you could not, they will likely receive a nasty demand letter from the creditor whose debt you discharged.  If the creditor believes that your co-signor has significant assets to recover, it may decide to sue that person, possibly forcing them into bankruptcy.
This is why I always advise people to not co-sign with friends or family members on loans.  Financial problems can cause huge rifts in otherwise harmonious family and personal relationships.  If I decide to lend a family member money, I do so with the intention that I will never see it again and treat it as a gift.
Be especially weary of who you have to co-sign for a Small Business Administration loan, as that person’s credit and financial life will be greatly affected the the success or failure of your business.



Posted 2 years 6 weeks ago

This may seem counter-intuitive, but owing more on your home mortgage can actually be a godsend in wither a Chapter 7 or Chapter 13 bankruptcy.  In a Chapter 7 bankruptcy, the Chapter 7 trustee is an individual appointed by the U.S. Trustee to administer your case.  This is a fancy way of saying this person is in charge of selling your non-exempt assets so he or she can distribute some funds to your unsecured creditors (medical bills, credit cards, etc.).  You see, immediately upon filing your petition, all your property is now property of the newly created bankruptcy estate, except of course for the property you can exempt under Georgia state law.  Exempt property is a dollar amount that you can shield from the grasp of creditors.  For instance, in Georgia, an individual can exempt up to $21,500 in his homestead.  This means that if the trustee were to sell your home for the benefit of your unsecured creditors, you would receive $21,500, if that much equity existed in your property.



Posted 2 years 12 weeks ago

An American tradition is to take the family to the beach for Memorial Day weekend, but if you or your spouse is about to file bankruptcy, do NOT charge this vacation on your credit card.  Your credit card company will heavily scrutinize any charge made within 90 days of filing bankrupcy, so my typical advice is to not even use your credit cards within 90 days of filing; however, there is nothing inherently (or legally) wrong with living your life and supporting your BASIC needs on credit.  The problem comes from section 523 of the bankrupcy code, which provides that any amount owed to a single creditor over $600 for a luxury good or service within 90 days of filing is presumed to be nondischargeable.  Nondischargeable means that the debt will not be wiped out by your bankruptcy discharge.  It does not matter whether you are filing Chapter 7 bankrupcy or Chapter 13 bankruptcy, the amount you charge for a luxury vacation (or almost any heavy travel) will be determined nondischargeable



Posted 2 years 13 weeks ago