What Happens When You File For Bankruptcy
If you’re sinking in debt and don’t know what else to do, bankruptcy may be your only choice. Many advantages come with it, but there are a few drawbacks to be aware of.
Chapter 13 and Chapter 7 bankruptcy are the most popular options.
Chapter 13 calls for a three- to five-year repayment period. There are regular payments to the Chapter 13 trustee and, usually, payments to the owners of your primary home if you file under Chapter 13. If you owe no money to secured creditors, such as vehicle or furniture loans, or have fallen behind on your mortgage, Chapter 7 may be your best option. In both cases, filing is meant to let you start over.
What is a chapter 11 bankruptcy?
Generally, big companies have the option of declaring bankruptcy under Chapter 11. Business owners benefit from debt restructuring since it enables them to continue operating and earning money while paying down their obligations. The plan has numerous advantages, but it also has certain drawbacks that should be considered when comparing various bankruptcy options. Here’s a really quick rundown of the advantages and disadvantages of filing for Chapter 11 protection.
Benefits of Filing for Chapter 11 Financial Reorganization
This kind of bankruptcy, as previously mentioned, provides the debtor with an opportunity to restructure their obligations. An automatic stay stops your creditors from attempting to collect payments from a company after filing for Chapter 11. A repayment plan for the debtor is in place while the automatic stay is in effect.
A lawyer who specializes in chapter 13 bankruptcy may be able to assist you in creating a repayment plan that includes lowered debt obligations or lower interest rates. Meanwhile, a Chapter 11 reorganization plan’s repayment schedule is referred to as a reorganization. Contracts, leases, and other types of debt may be renegotiated in order to decrease or eliminate debt obligations while still being profitable for the company. Since a result, creditor acceptance is usually high, as the repayment plan they get is frequently preferable to the one they would receive under Chapter 7.
The restructuring plan divides creditors into several groups with varying levels of priority. State and federal tax authorities, unpaid employee salaries, and stock options are at the top of the priority list. Unsecured creditors are grouped together in one class, whereas secured creditors have their own group. Once the court approves the plan, the debtor must pay all of their creditors according to the terms of the reorganization plan.
Disadvantages of Filing for Chapter 11
While Chapter 11 has numerous advantages, the most important of which is that businesses may continue to function, it also has significant drawbacks. Companies in financial trouble may find it difficult to afford the time and expense of Chapter 11. No assets must be sold, but filing costs and legal fees may add up quickly. As soon as their plan is approved, they’ll begin paying off their previous obligations, which will take many years until everything is approved.
They must also attempt to come up with a workable reorganization plan and have it authorized by the bankruptcy court. Businesses may struggle to find a solution to their financial problems.
It’s not only for large corporations anymore.
Chapter 11 bankruptcy is commonly utilized by big companies, although it has also been used by small enterprises. In most cases, a small company is considered to have less than 500 workers. To give itself more time to negotiate with creditors and come up with workable repayment arrangements, a small company may opt for Chapter 11 versus Chapter 7. When filing for Chapter 11, you have 180 days to negotiate with creditors, whereas under Chapter 7, you only have approximately 2 weeks. It’s more difficult for small companies to remain operating if they have to sell off their assets under Chapter 7, which is more focused on liquidating assets to pay off debts. A small company, on the other hand, may find Chapter 11 unaffordable.
The filing fee will be greater than Chapter 7, and there may be additional court expenses, even if they do not have to liquidate their assets. Chapter 11 may not be the best choice for a company seeking to recover some of its losses.
Speak with a Bankruptcy Lawyer in Georgia
Both large and small companies that are in financial difficulty may seek relief via bankruptcy. They’ll have to decide which strategy works best for them. It’s wise to seek the advice of a knowledgeable bankruptcy attorney to get them off to a good start.
Bankruptcy doesn’t have to mean the end.
Again, a widespread misunderstanding holds that declaring bankruptcy means the end of one’s financial future. If you’re thinking of filing, there are certain things to keep in mind, but it won’t destroy your life. Getting out of debt is the goal, and this program is meant to assist you in doing that.
The majority of the time, you’re allowed to retain your assets, such as your home, vehicle, and any unresolved taxes.
Reframe your perspective on bankruptcy and give it a fresh look.
No one would ever make a claim if it were intended to destroy their lives. It’s there to help you get out of debt and onto a more positive road. Please contact us if you have any questions about this process.
Investigating Bankruptcy in More Depth
Many individuals struggle with money management. Because you can’t plan for every major expenditure, many individuals depend on credit cards to get them through tough times and end up in debt as a result. The burden of debt weighs heavily on your shoulders, and you’re not alone. For many of us, savings may move from cushioned to brittle in a matter of months or even weeks. To help you navigate through this difficult time, our Georgia bankruptcy lawyers are here to answer any questions and explain all of your available choices.
You may be concerned about what going bankrupt implies about you.
Bankruptcy may be linked to failure in your mind. Hopefully, you now view bankruptcy as an opportunity rather than a failure. It may demonstrate your willingness to change for the better in order to preserve your present and your future. When filing is really your only option, you’ve made a sensible decision. Companies you owe money to will be informed when you file for bankruptcy. The procedure is designed to be conducted with the assistance of a knowledgeable lawyer. In essence, you’re asking for the forgiveness, rescheduling, or reduction of some of your debts. Your financial situation will be scrutinized carefully, and you will have to deal with a great deal of paperwork. It would be beneficial if you had the assistance of one of our Georgia bankruptcy lawyers throughout the procedure.
Good Things About Filing for Bankruptcy
Many individuals use the internet to learn about bankruptcy’s advantages and disadvantages. When individuals get into financial difficulties, it’s no wonder they feel anxious and worried. It’s likely affecting your general well-being as a result. Filing for bankruptcy may be seen to be a significant step. It’s understandable that you’re worried about it. You should be aware that declaring bankruptcy may pave the way for a brighter financial future.
If you file, debt collectors will no longer be able to contact you 24 hours a day. They’ll be gone from your inbox. In addition, bankruptcy may safeguard your assets, so if you own a vehicle or a home, you may retain them. The next step is to put a halt to any legal action brought against you, with the exception of family law. It’s time to put an end to small claims court and the garnishments that go along with it.
If you have any concerns regarding bankruptcy in general or about Chapters 7, 11, 12, and 13, please don’t hesitate to contact us. We’ll be happy to assist you. While we understand that this is a testing time for you and that it may seem overwhelming, remember that by considering bankruptcy, you are making a wise decision.
Many individuals are curious about the impact on their credit record if their spouse files for bankruptcy. The short answer is no, but that’s only if. Your credit will be affected if you or your spouse are jointly responsible for any debt that is not presently paid. A joint bankruptcy filing by your spouse would mean that any debt you had with your spouse would be shown on your credit report as overdue if you haven’t been making payments on it. Although it won’t appear on your credit report as a personal bankruptcy, missed payments will show up as a blemish if you don’t get them up to date. Talk to us if you are worried about your spouse declaring bankruptcy and how it may impact your credit.
If I’m unable to make my mortgage payments, should I consider declaring bankruptcy?
It’s not far fetched that we often get calls for Georgians about past-due mortgage payments. Chapter 13 is a brilliant way to get caught up on back payments on a mortgage that has fallen behind. Generally, a Chapter 13 lasts three to five years after it is filed. A Chapter 13 bankruptcy would allow you up to five years to make up on your mortgage payments if, for example, you are two or three months behind and the mortgage company is foreclosing. This is the amount of the delinquency that you will pay in bankruptcy if you split your overdue payments by 36 or 48 or 60, depending on how long and how long your plan is. Whether you file for Chapter 7 or Chapter 13, you’ll still be responsible for your existing debt payments. You’d have to start paying your regular monthly payments the month after you file. When it comes to Chapter 7, you may be able to catch up on your monthly payments if you qualify for a Chapter 13 reorganization. Just give us a call if you have any further concerns or questions about it.
After declaring bankruptcy, what steps should I take to re-establish my credit?
Many of our customers are curious about the process of re-establishing credit following bankruptcy. That is a pretty simple stance to take on the issue. Rebuilding your credit requires taking on debt. One option is to obtain a credit card, maybe one with a $500 deposit that allows you to use the card up to that amount and then pay off the balance as you go. You may build your credit history by doing something as easy as that. You may repair your credit by getting a relative to cosign on a car loan with you. The most important thing to understand while filing for bankruptcy is that it was your use of credit that got you into difficulty in the first place. You need to be very cautious about how you rebuild your credit and how much you borrow since on any credit report, on-time payments are the most essential feature. Please don’t hesitate to contact us if you have any concerns. We’d be delighted to assist you.
What will happen to my credit if I file for bankruptcy?
People often inquire about the impact of bankruptcy on their credit records. The answer is that it is dependent on a number of factors. Delinquent or missing payments are common reasons why individuals come to us to file for bankruptcy, therefore we see a lot of folks who already have poor credit records. You’re already overdue on your credit report if you’ve missed one or two payments. If that’s the case, filing for bankruptcy won’t have a significant impact on your credit record. If you file for bankruptcy, it will be on your report. Again, a Chapter 7 will be on your credit record for ten years, whereas a Chapter 13 would appear on your report for seven years. The important issue, in my opinion, is what steps you are taking to get yourself back on track and out of debt. The main point of filing for bankruptcy is to let you look to the future and rebuild your credit.
Chapter 7 and Chapter 13, how are they different?
People often to call and ask about the difference between a Chapter 7 and a Chapter 13 bankruptcy and I say a Chapter 7 bankruptcy is a moment in time. A picture of your financial situation at a certain point in time. Chapter 13 is similar to a movie. It is easy to keep up with. You take a step back and judge your position over time. It takes between three and five years to pay off all of your debts when filing for Chapter 13. If you owe money on a vehicle, other property, or medical expenses, you’ll have to pay it back over time. Chapter 7 can be referred to as a “liquidation” bankruptcy, where you only consider your financial position as it exists at the time of filing. You’ve been released from your financial obligations. Those who owe money on a vehicle loan or a home mortgage are barred from making extra installments. Those payments have to be current at all times. Chapter 13, on the other hand, provides a chance to make up missed payments over a three- to five-year period. Please contact us at our office if you have any concerns about Chapter 13 or Chapter 7.
What are the benefits of declaring bankruptcy?
Many individuals want to know whether they should file for bankruptcy, really it’s a last resort. Bankruptcy has a strange effect. It helps many people. A foreclosure can be halted as a result. Garnishment of wages is no longer possible thanks to this law. It puts a halt to foreclosures. For honest individuals, bankruptcy is a miracle bullet. Absolutely no doubt about that. It may assist you with a wide range of issues, including getting back on the right financial path. It’s vital to hire an experienced bankruptcy attorney when filing for bankruptcy since they can examine the specifics of your position and help you decide whether it’s the best option for you. You might be able to work out a solution with a single creditor, such as obtaining a loan or a home loan modification. An expert lawyer can examine your entire circumstances and help you decide if bankruptcy is the best option for you to essentially repair your credit score. Please get in touch if you have any concerns or inquiries.