Frequently Asked Questions Regarding Bankruptcy

Bankruptcy legal process that is designed to help individuals and businesses that have more debt than they are able to afford. In filing for bankruptcy, a person or a business can eradicate most or all of their debt in a relatively short period of time, or pay back what they owe over time by way of an agreed-upon payment plan. A Roswell bankruptcy lawyer from The Sherman Law Group can help you find out more about the process.

There are three primary types of bankruptcy, and they each cater to those with specific financial situations or needs:

• Chapter 7, or “straight bankruptcy,” involves a person liquidating their non-exempt assets for the purpose of paying back creditors. Their debt is usually discharged by the court in a period of months.
• Chapter 11 serves businesses and individuals with high debt loads, and involves being given more time to pay off debt so that they can reorganize/restructure and return to financial viability.
• Chapter 13 sees the individual working out a payment plan with their creditors through the bankruptcy court, and then making payments on that plan until their debts are satisfied. This method typically takes a number of years.

Only those debts that have been incurred prior to filing for bankruptcy are eligible for discharge. Any debts incurred after the fact are not able to be addressed by the person’s current bankruptcy proceedings. In addition, there are also debts that are always ineligible for discharge, no matter when they were incurred. These include child support debts, alimony, student loans, and back taxes.

Each bankruptcy type has certain qualifications that a person must meet before their petition will be accepted. Those intending to file for Chapter 7 must take a “means test” that establishes the validity (or lack thereof) of their financial hardship. Those intending to file for Chapter 13 must be able to prove that they have the income necessary to make payments to their creditors on their payment plan.