NORTH GEORGIA LAWYERS REPRESENTING INDIVIDUALS & BUSINESSES IN CHAPTER 7 BANKRUPTCY
Perrotta & Cahn helps consumers and businesses find relief from debt and take control of their financial futures by using protections afforded under bankruptcy law. Our lawyers work from offices in Cartersville, Calhoun, Dalton and Dallas, making us convenient to clients throughout northwest Georgia. Learn more about Chapter 7 bankruptcy here.
Who Should File for Chapter 7 Bankruptcy?
In most cases, a Chapter 7 bankruptcy debtor is an individual or entity whose expenses exceed his or her income. This could be caused by illness, economic hardship, unemployment, unexpected lawsuits, tax debts or any other circumstances that render the debtor insolvent. At this point, the individual or entity is unable to repay his or her debts.
Filing for relief under Chapter 7 of the U.S. Bankruptcy Code can provide the individual or the entity the ability to discharge or eliminate their dischargeable unsecured debts in exchange for liquidation of the debtor’s “non-exempt” assets. Certain assets are exempt from bankruptcy, even under Chapter 7 liquidation, because each state grants the privilege of protecting a certain amount of equity in some assets. In Georgia, exemptions are designed to allow the debtor to retain property (including a certain amount of real estate) deemed necessary by the Georgia Legislature to obtain a fresh financial start.
For more information about dischargeable debt and exempt assets, please see our Chapter 7 FAQs.
The Automatic Stay
Upon filing for relief under Chapter 7, an “automatic stay” immediately takes effect. The automatic stay prohibits and prevents creditors from taking any action against the debtor without first securing permission from the Bankruptcy Court, which makes it a very powerful tool. It can and does stop all collection efforts against the debtor, including those of the IRS. Once a petition is filed, any creditor who attempts collection efforts may be subject to serious penalties imposed by the Bankruptcy Court in violation of the automatic stay.
What Happens after Chapter 7 Bankruptcy?
Receiving a final discharge at the conclusion of Chapter 7 bankruptcy proceedings constitutes a permanent injunction barring all creditors owed dischargeable debts incurred prior to filing for bankruptcy from ever collecting on these debts. At the same time, any assets of the debtor that were deemed exempt by Georgia law remain in the possession of the debtor. Those debts deemed non-dischargeable (i.e. debts that cannot be eliminated by Chapter 7 bankruptcy), such as child support and fraud-related debts, are still owed by the debtor.
A Chapter 7 debtor is typically allowed to maintain installment payments on mortgages and automobile loans in order to retain a residence or vehicle. The creditor, however, may require the account to be completely current, and may also require execution of a “Reaffirmation Agreement.” Such an agreement, when properly executed and filed (and not rescinded within a rescission period) will personally bind the debtor to repay the reaffirmed obligation as though a bankruptcy was never filed on that debt.
If an account is not current and cannot be brought current prior to filing for bankruptcy, Chapter 13 bankruptcy may be a better option than Chapter 7 because Chapter 13 allows you to restructure and repay debt obligations according to more manageable payment terms. For more information, please see our Chapter 13 bankruptcy page.
Contact an Experienced Georgia Bankruptcy Attorney
If you are facing financial difficulties and mounting debt, we can help restore you to positive financial health. Please contact Perrotta & Cahn to discuss your options under bankruptcy law. We offer free initial consultations.