Fulton & Dekalb County Consumer Bankruptcy Lawyer
What’s more American than Apple Pie? Bankruptcy. That’s right, back in 1776 apples were primarily used to make cider instead of delicious desserts, but our Founders had a sophisticated view on the need for a legal mechanism that would allow people and businesses to recover if they took financial risks and lost.
Article 1, Section 8, Clause 4 of the United States Constitution authorizes Congress to enact “uniform Laws on the subject of Bankruptcies throughout the United States.” In 1800, Congress used this power to pass the first federal bankruptcy law, perhaps spurred to action by the imprisonment of Robert Morris. Morris was a prominent Philadelphia merchant who signed the Declaration of Independence and virtually bankrolled the Revolution but was confined to debtors’ prison after investing a considerable portion of his fortune in land shortly before the Panic of 1796–1797.
Over the years, our country’s bankruptcy law has evolved, which is a good thing since the original law really favored creditors over debtors. Today, the law is more balanced. It still protects creditors, but it also ensures that debtors are able to restart their lives after emerging from the process.
Our laws allow a taxpayer to wipe their financial slate clean by filing for bankruptcy protection under either a Chapter 7 or Chapter 13 protection.
Chapter 7 Bankruptcy
When most people think about bankruptcy, what they are thinking about is the classic Chapter 7 bankruptcy. In a Chapter 7 bankruptcy, a debtor’s assets are liquidated and the money generated is used to pay off creditors. Most remaining debt is then forgiven, and the debtor starts over with a completely clean slate.
Note that we said most; not all debt is forgiven through the Chapter 7 process. Some debt, like medical bills and credit card debt is wiped away easily, but certain debt remains intact. Back taxes, unpaid child support or spousal support, and student loan debt are rarely forgiven. However, these debts can sometimes be renegotiated through the bankruptcy process to give the debtor a realistic chance at paying them off going forward. We also can help you overcome any tax burden or student loan debts you may have.
And moving forward is what the Chapter 7 process is all about. A Chapter 7 filing usually only takes a few months, and those who go through it emerge with significantly less debt than those who choose to go through the Chapter 13 process instead.
We work with our clients who are going through the Chapter 7 process to ensure that they are set up for success post-bankruptcy. We make sure our clients know what debts they will still be responsible for, and we work with them to take advantage of exemptions, which can help them hold onto their house or car through the process.
Chapter 13 Bankruptcy
Whereas Chapter 7 is like a personal going-out-of-business sale, the Chapter 13 process is like a corporate restructuring. The goal is not really to forgive debt, but to make it manageable. Instead of selling off basically all of their assets, a debtor going through the Chapter 13 process may keep pretty much anything they want to keep so long as they can demonstrate that they will be able to pay off the debt associated with it. This is possible because under Chapter 13, the debtor works to pay back their creditors through a court-supervised repayment plan.
The repayment plan lasts a few years. Under it, the debtor makes payments directly to the court, which then supervises the repayment of the filer’s creditors. To facilitate the process, the filer’s debts are often renegotiated to decrease the total amount owed or to lower the interest rate. Creditors are willing to be flexible because the Chapter 13 process typically nets them more than a traditional Chapter 7 bankruptcy would.
At the end of the repayment plan period, most if not all the filer’s debts should be paid off. Most remaining debt that is unsecured (like credit card debt and medical debt) is forgiven at the end of the repayment period, but secured debts (like mortgages and car payments) remain in place. Student loan debt, back taxes, and unpaid child or spousal support also remain, but it may have been renegotiated. In theory, the filer should be in a position to pay off these remaining debts because the Chapter 13 process has put that individual in a better financial place.
Hitting the Pause Button
No matter which Chapter of the bankruptcy code a debtor files under, one of the big advantages of filing for bankruptcy protection is that it hits the pause button on all other legal matters. Some debtors are able to use this as a way to halt the eviction or foreclosure process.
Bankruptcy also provides protection against harassment from debt collectors. All collection attempts must cease once a bankruptcy has been filed, because the creditor is required to seek redress through the courts rather than directly. Debtors who continue to be contacted can report the creditor to the court, which has the authority to punish the creditor for violating the ban on collections during bankruptcy.
The Wooten Firm Advantage
The Wooten Firm is aggressive and affordable. We have years of experience representing consumers in the bankruptcy courts. Because of this, we are able to give our clients the same level of sophisticated representation they would receive from a large law firm, but in a friendly manner and at an affordable price.
We are flexible, experienced, and ready to do everything we can to help our clients resolve their financial issues and move on with their lives. Contact us to schedule a consultation.