Which Chapter of Bankruptcy is Right for Me?

Life's financial curveballs can arrive unexpectedly and sideline you from paying bills, settling debts, and meeting your basic needs. When experiencing financial adversity, filing for bankruptcy can help you achieve debt relief and get the financial fresh start you deserve. A knowledgeable Georgia bankruptcy attorney can review your financial situation and help you decide which chapter of bankruptcy is right for you.

At Pytte Law, I have the experience and resources to assist and guide clients through the complexities of bankruptcy proceedings. I'm available to evaluate your circumstances and help you understand the debt relief options that are available to you. I can also help with the necessary documentation, guide you through every stage of the bankruptcy process, and help you navigate key decisions going forward. My firm is proud to serve clients across Savannah, Hinesville, Statesboro, Ludowici, Chatham County, Long County, and Tattnall County, Georgia.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy (also called "liquidation" bankruptcy) can help individuals and business owners going through financial difficulty eliminate most of their general unsecured debt and obtain a clean financial slate. In Chapter 7 bankruptcy, the court will appoint a trustee (an independent contractor) to oversee the entire bankruptcy case. The trustee will collect all of your non-exempt assets, sell them, and use the proceeds from the sale to settle some or all your debt.

Non-exempt assets are property and assets that can be sold in a Chapter 7 case. These include vacation homes, second homes, bank accounts, second cars, family heirlooms, stocks, cash, bonds, and other investments. You will still be left with your exempt assets, including your primary home, clothing, household appliances, a car, and furniture.

Who Qualifies for Chapter 7?

In order to qualify for Chapter 7 bankruptcy in Georgia, you must pass the bankruptcy "means test." The bankruptcy means test will evaluate your financial history, deduct expenses and payments, and determine your amount of disposable income. You automatically pass the bankruptcy means test if your income is less than the median income for your household size in Georgia.

The median income for each respective household size in Georgia is as follows:

  • One-person household — $53,105
  • Two-member household — $68,295
  • Three-member household — $76,391
  • Four-member household — $92,286

*Add $9,000 for each person in a household in excess of four members.

The figures listed above are for cases filed on or after May 15, 2021, but they're updated regularly. Eligible candidates will also be required to attend credit counseling courses at an accredited institution in the state. This can be completed online.

When is Chapter 7 a Good Option?

Chapter 7 may be a good option if:

  • You have few assets
  • Your income is lower than the median income for your household size in your state
  • You have credit card balances, medical expenses, and personal loans that can be wiped out or discharged

Chapter 13 Bankruptcy

Chapter 13 bankruptcy (also known as "wage earner's" bankruptcy) is available to individuals who earn a reasonable income but are overwhelmed with debt. In Chapter 13, the consumer seeking bankruptcy will propose a repayment plan to pay down the debt using their potential earnings. The repayment plan will be structured over a period of three to five years and must be approved by the court.

Through a Chapter 13 repayment plan, you can pay off some or all of your debt over an extended period with your future earnings. Above all, you will be allowed to retain your assets, including your cars and home.

Who Qualifies for Chapter 13?

In the state of Georgia, only individuals with a "regular source of income" can qualify for Chapter 13 bankruptcy. Likewise, you may be allowed to file for protection under Chapter 13 of the U.S. Bankruptcy Code if your income is more than the state's median income for your household size.

When is Chapter 13 a Good Option?

Chapter 13 may be a good option if:

  • You have a regular source of income to help you follow the repayment plan
  • You own several assets and you have no desire to lose any of your property
  • The majority of your debt is nondischargeable tax, domestic support debts, or student loans

Chapter 11 Bankruptcy

Chapter 11 bankruptcy (commonly referred to as "reorganization" bankruptcy) is designed to afford consumers and businesses going through financial distress enough time to reorganize their finances or business operations, affairs, assets, and eventually pay back their debt.

In a Chapter 11 bankruptcy case, the debtor (usually a business owner) will propose a repayment plan to repay creditors while they continue running their business. Before the repayment plan can be confirmed, it must be approved by both the court and the creditors.

Filing for protection under Chapter 11 of the U.S. Bankruptcy Code in Georgia is often expensive and time-consuming, however.

Who Qualifies for Chapter 11?

Any individual or business whose secured debt or unsecured debt exceeds the limits of a Chapter 13 bankruptcy filing may file for Chapter 11 bankruptcy and reorganize their finances. As long as you need time to reorganize your finances, you can file for Chapter 11 bankruptcy.

When is Chapter 11 a Good Option?

Chapter 11 is a great option if:

  • You're a large corporation or business
  • You have more debt to reorganize than allowed under Chapter 13 "debt limit"
  • You want to keep running your business

Pytte Law: Experience You Can Trust

Filing for bankruptcy is quite common in Georgia, and it doesn't mean the end of the world. According to statistics from the American Bankruptcy Institute, there were 27,953 total bankruptcy filings in Georgia in 2020, including 14,065 Chapter 7 filings, 13,702 Chapter 13 filings, and 164 Chapter 11 filings. These consumers didn't go through bankruptcy alone, and neither should you. When thinking about filing bankruptcy, it is important that you speak with an experienced bankruptcy attorney to evaluate your options.

At Pytte Law, I have devoted my career to providing knowledgeable guidance and strong advocacy to clients in bankruptcy-related matters. As your legal counsel, I can review your financial situation, educate you about your available bankruptcy options, and determine the right chapter of bankruptcy for you. Whether you are filing for Chapter 7, Chapter 13, or Chapter 11, I can explain the benefits and drawbacks of each chapter, determine your eligibility, and guide you through every phase of the legal proceedings.

Contact me — John E. Pytte | Your Georgia Debt Relief Specialist — today to schedule a consultation with a knowledgeable bankruptcy attorney. I can offer you the comprehensive legal counsel, support, and reliable advocacy you need to make informed decisions regarding bankruptcy and your financial situation. My firm proudly serves clients across Savannah, Hinesville, Statesboro, Ludowici, Chatham County, Long County, and Tattnall County, Georgia.


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