What Type of Bankruptcy Should I File?

In Georgia, there are two primary types of bankruptcies for consumers: Chapter 7 and Chapter 13 Bankruptcy. 

Chapter 7 

A Chapter 7 bankruptcy allows a debtor to discharge all or a portion of his or her unsecured debts without ever repaying the creditors. Under a Chapter 7 bankruptcy, a debtor can return secured property to a creditor if the debtor can no longer afford it. If a debtor can afford to keep the property, he or she can keep it by reaffirming the debt. Once that happens, payments will continue under the reaffirmation agreement. Examples of secured property include real property and automobiles. 

After a Chapter 7 bankruptcy is filed, a court-appointed Trustee will oversee the case, review the Bankruptcy petition, examine the debtor under oath, and close the case so that the Debtor can receive his discharge. 

While a Chapter 7 is ideal for most Debtors, as it allows the Debtor to walk away from dischargeable debt without ever repaying the debt, it may not be feasible for all Debtors.  A debtor that is a jeopardy of losing their home through foreclosure or their automobile through a repossession and still desires to retain the same, would still lose the property in a Chapter 7 unless they could get current on the payments just a few short weeks after filing bankruptcy.  Also, a Debtor that has filed a previous Chapter 7 bankruptcy and received a discharge in the past 8 years is not eligible to receive another discharge through a Chapter 7.  In other cases, a Debtor may simply earn too much to qualify to file a Chapter 7.  Yet other Debtors that may have a substantial amount of assets may be unable to protect all of their assets from a forced sale by the Trustee.  These Debtors described above would need to file a Chapter 13 Bankruptcy. 

Chapter 13 

A Chapter 13 is a type of reorganization, and is sometimes called a “Wage Earners Plan”. It allows Debtors to protect some assets and repay arrears on secured debts such as, mortgage payments or car loans, through a reorganization plan.  The Plan is submitted to a bankruptcy judge and Chapter 13 Trustee for approval. If the Trustee and creditors have no objections to the Plan, the Judge will generally approve the Plan so that the Trustee may begin to administer the plan. The trustee collects the funds from the debtor and distributes the funds to creditors. 

A Chapter 13 can only be filed by individuals with sufficient income to pay the creditors. The individuals cannot have secured debt over $ $1,149,525 or unsecured debt over $383,175. A Chapter 11 may be available for people having more debt than allowed for a Chapter 13.

If you are contemplating bankruptcy, contact Bankruptcy Attorney Yolvondra Martin for your consultation.

The Martin Law Group | 404-248-4898 | ymartin@themartinlawgroup.com