You are here
Frequently Asked Questions
What is bankruptcy?
Bankruptcy is a set of federal laws and rules that can help individuals and businesses who owe more debt than they can pay. Federal courts have exclusive jurisdiction over bankruptcy cases. This means that a bankruptcy case cannot be filed in a state court.
Bankruptcy laws help people who can no longer pay their creditors get a fresh start by liquidating their assets to pay their debts, or by creating a repayment plan. Bankruptcy laws also protect troubled businesses and provide for orderly distributions to business creditors through reorganization or liquidation. These procedures are covered under Title 11 of the United States Code (the Bankruptcy Code). The vast majority of cases are filed under the three main chapters of the Bankruptcy Code, which are Chapter 7, Chapter 11, and Chapter 13.
Bankruptcy Basics is a publication of the Bankruptcy Judges Division of the Administrative Office of the U.S. Courts. It provides basic information to debtors, creditors, court personnel, the media, and the general public on different aspects of federal bankruptcy laws. It also provides individuals who may be considering bankruptcy with a basic explanation of the different chapters under which a bankruptcy case may be filed and answers some of the most commonly asked questions about the bankruptcy process.
Who can file a bankruptcy?
Almost anyone can file a bankruptcy case, though there are restrictions. For instance, there are specific debt levels for filing under Chapter 13 and if you file under Chapter 7, in certain situations your case may be converted to Chapter 13 if it appears you have sufficient income (or means) to repay some of your debts. Further, if you have been in a previous bankruptcy case that was dismissed, your eligibility to file another bankruptcy case or obtain the benefit of the automatic stay in a subsequent case could be affected. In all cases, it is advisable to consult with an experienced bankruptcy attorney in making this decision so that you understand your rights and obligations.
Should I file? and Which chapter is right for me?
Deciding whether to file bankruptcy and under which chapter is an extremely important decision and should be made only after a review of all the relevant facts. This is a decision greatly influenced by the amount of debt and the ability to make payments to creditors. Anyone considering filing for bankruptcy protection should investigate all possible options, and should speak with an attorney who is familiar with bankruptcy for an explanation of the law specfic to their circumstances.
Bankruptcy Basics is a publication of the Bankruptcy Judges Division of the Administrative Office of the U.S. Courts. It provides individuals who may be considering bankruptcy with a basic explanation of the different chapters under which a bankruptcy case may be filed and answers some of the most commonly asked questions about the bankruptcy process.
Do I have to do anything before filing for bankruptcy relief?
Yes. The current bankruptcy law requires that a debtor wanting to file for bankruptcy protection must obtain credit counseling prior to filing a case. The credit counseling must be completed within six months prior to the date the case is filed. Debtors must receive the credit counseling only from those agencies that have been approved by their regional U.S. Trustee. For a list of approved agencies, click HERE
After filing, debtors are required to complete a debtor education course before receiving a discharge of debts. This course is in addition to the pre-filing credit counseling. Certificates are received upon the completion of each course, and they must be filed with the Bankruptcy Court. For a list of approved Financial Management Instructional Courses, click HERE
Does my spouse have to file with me?
A debtor can file an individual case or a joint case depending on the advantages or disadvantages of each. In order to determine which is better for you, it is advised that you consult with a bankruptcy attorney.
A joint petition is one bankruptcy petition filed by a husband and wife, requiring the signatures of both people. Only people who are married on the date they file may file a joint petition. All their property and their debt will be handled together in this one joint case. A husband and wife seeking bankruptcy relief are not required to file a joint petition. Again, experienced legal counsel should be consulted to evaluate the legal consequences for each potential course of action.
Where do I file my bankruptcy case?
Bankruptcy cases are filed in the Clerk’s Office of the appropriate United States Bankruptcy Court. Bankruptcy Courts are part of the federal court system which divides the country into 94 judicial districts. Every state has at least one federal judicial district, and many have more. Georgia has three federal judicial districts, Northern, Middle and Southern. Due to its size, the Northern District of Georgia has been split into four divisions, each with a fully staffed Clerk’s Office. All four divisional Clerk’s Offices are open from 8:00 a.m. - 4:00 p.m. Monday through Friday (except legal holidays).
The Bankruptcy Court for the Northern District of Georgia covers the 56 counties in northern Georgia. If the debtor's residence, principal place of business or principal assets have been located in one or more of these counties for the necessary period of time, the case should be filed in the U.S. Bankruptcy Court for the Northern District of Georgia. The specific county of your residence, principal place of business or principal assets determines in which of the Northern District of Georgia’s four divisions your case should be filed. Click HERE to determine which division to file in.
Will I have to appear in Court?
Yes. When a debtor files a bankruptcy case, he or she is required to attend a hearing titled Section 341, First Meeting of Creditors. This hearing is scheduled approximately 30 days following the filing of the case. A debtor filing a Chapter 13 case may also be required to attend his or her confirmation hearing. The confirmation hearing is when the judge assigned to the case approves the repayment plan filed by the debtor. Further, a debtor may be required to attend additional hearings depending on the circumstances of his or her case.
What is the Meeting of Creditors?
This meeting of creditors is held approximately thirty days after the bankruptcy petition is filed. The Chapter 7 or Chapter 13 Trustee presides over the meeting of creditors. The debtor and everyone listed on the list of creditors filed by the debtor will receive written notice of the day, time, and location of this meeting. The purpose of the meeting is to give the Trustee and creditors an opportunity to question the debtor under oath. The meeting of creditors is also called the “section 341 meeting” because 11 U.S.C. § 341 of the Bankruptcy Code requires that the meeting be held.
The debtor (both spouses in a joint case) must be present at the meeting to be questioned under oath by the Chapter 7 or Chapter 13 Trustee and by creditors. Creditors are welcome to attend, but are not required to do so. The meeting may be continued and concluded at a later date without further notice.
What are exemptions?
In accordance with 11 U.S.C. § 522(b) of the Bankruptcy Code, certain states, including Georgia, allow an individual debtor to exempt real, personal, and intangible property from the property of the debtor’s estate. Exempt assets are protected by state law from liquidation and distribution to creditors. The exemptions allowed under Georgia state law are listed in section 44-13-100 of the Georgia Code. Under bankruptcy law, debtors are entitled to list the assets set forth in section 44-13-100 of the Georgia Code as exempt.
Deciding which assets are exempt and if and how you can protect these assets from your creditors can be one of the more important and difficult aspects of your bankruptcy case.
It is important to note that although you may be discharged from further personal responsibility for certain debt, a creditor will still have a lien or security interest in your secured property after you receive your discharge. Under 11 U.S.C. § 522(f) of the Bankruptcy Code, however, you are allowed to file a motion with the Court for an order avoiding certain kinds of liens or security interests in various property.
What is an automatic stay?
The filing of a voluntary, joint, or involuntary petition under any chapter of the Bankruptcy Code automatically operates as a stay against the commencement or continuation of most judicial, administrative or other proceedings against the debtor or property of the debtor’s estate. The purpose of the stay is to give the Chapter 11 or Chapter 13 debtor “breathing time” for rehabilitation, to give the Chapter 7 Trustee the protection necessary for administering the assets of the estate, and to relieve the Chapter 7 debtor from the pressure of creditor collection efforts. During this time, creditors should not be contacting the debtor about debts or taking action to recover property from the debtor in which they claim a security interest. If contacted by a creditor, the debtor may advise them that they have filed bankruptcy and provide them with the case number.
There are also some new limitations on the automatic stay if the debtor has had a previous case or cases dismissed under certain circumstances within the preceding twelve months. If a second case under these circumstances is filed, the stay as to some property will only be good for 30 days. If a third case is filed, then the automatic stay does not apply at all.