What Does Bankruptcy Protection Actually Mean?

TRI Writer • November 1, 2019

Kenneth C Rannick pc, Kenneth C Rannick bankruptcy, Rannick bankruptcy attorney, tennesee bankruptcy attorney, Georgia bankruptcy attorney, Tennessee bankruptcy lawyer, Georgia bankruptcy lawyer, declare bankruptcy in Tennessee, declare bankruptcy in georgiaThe bankruptcy code is found in Title 11 of the United States Code; it is federal law administered in Federal Courts. The U.S. Dept. of Justice administers all bankruptcy cases. Bankruptcy laws are powerful, and creditors in violation can see heavy penalties. When a debtor files a bankruptcy petition, they immediately receive the benefits of bankruptcy protection , but what sort of protection does bankruptcy offer?

  1. Protection from Creditor Harassment: Immediately when a bankruptcy petition is filed, the automatic stay of bankruptcy goes into effect with a few limited exceptions. The automatic stay prevents creditors from attempting to enforce claims or judgments against the bankruptcy petitioner.
  2. Protection from Legal Action: Some creditors seek payment through the courts with judgments, wage garnishment requests, liens, etc. Any lawsuit filed or judgment issued in or by a State court is subject to the automatic stay of bankruptcy immediately upon filing the bankruptcy petition. Bankruptcy’s automatic stay makes most State court lawsuits or judgments against the petitioner legally unenforceable outside of bankruptcy.
  3. Protection from Economic Enslavement: The U.S. bankruptcy code protects rights held as self-evident, inalienable, and God-Given: the right to be left alone, to pursue happiness, and to enjoy the fruits of your labor. The bankruptcy court has the power to issue a discharge order to debtors seeking the protection of bankruptcy under 11 USC 727. The discharge order cancels the debtor’s obligation to repay completely.

The “Automatic Stay” offers immediate protection to bankruptcy filers from virtually all collections, lawsuits, garnishments, foreclosures, repossessions, judgments or other debt collection related legal proceedings. The bankruptcy court mails notice of the automatic stay order to all the bankruptcy filer’s creditors, associated lawyers and parties of interest that may be seeking payment or plan to request payment in the future on current debt. Creditors in willful violation of the automatic stay may face penalties, including Fines and Sanctions for contempt of a Federal Court Order, Punitive Damage Awards, Court Costs, and Attorneys’ Fees.

If you are struggling under an impossible burden of debt, there is hope. Get in touch with the experienced Tennessee and Georgia bankruptcy attorneys at Kenneth C. Rannick P.C. today. We help good people through bad times every day, and we can help you, too.

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Subchapter 5 Bankruptcy: Unlocking New Possibilities for Tennessee Residents

January 30, 2024
Are you a Tennessee resident facing financial challenges and considering bankruptcy? If so, you may have heard about a relatively new option called Subchapter 5 bankruptcy. But what exactly is Subchapter 5 and how does it differ from traditional Chapter 11 bankruptcy? More importantly, what benefits does it offer to individuals and small businesses?  In this blog post, we will explore the world of Subchapter 5 bankruptcy and shed light on its advantages for Tennessee residents. Whether you're a struggling entrepreneur or an individual burdened by overwhelming debt, understanding the potential benefits of Subchapter 5 can help you make informed decisions about your financial future. What is Subchapter 5 Bankruptcy? Subchapter 5 is a relatively recent addition to the United States Bankruptcy Code, specifically designed to provide a streamlined and cost-effective bankruptcy process for small businesses and individuals. It was created as part of the Small Business Reorganization Act (SBRA) in 2019, with the aim of increasing accessibility to Chapter 11 bankruptcy relief. The Benefits of Subchapter 5 Bankruptcy Simplified Process: One of the key advantages of Subchapter 5 is its simplified and faster bankruptcy process. Unlike traditional Chapter 11 bankruptcy, which can be complex and costly, Subchapter 5 offers a more streamlined approach that is better suited for small businesses and individuals. Retention of Ownership: Under Subchapter 5, business owners have the opportunity to retain ownership and control of their company while developing a repayment plan. This allows for greater flexibility and the ability to restructure debts without losing ownership interests. Reduced Plan Requirements: Subchapter 5 eliminates certain stringent plan requirements that are typically associated with traditional Chapter 11 bankruptcy. This simplification of the plan process makes it more accessible to small businesses and individuals. Debt Repayment Plan: Subchapter 5 allows for the development of a debt repayment plan based on the individual's or small business's disposable income. This plan spans over three to five years, making it more manageable and achievable for debtors. Creditor-Friendly Approach: Subchapter 5 encourages creditor participation and collaboration, promoting consensual resolutions and a more amicable environment. This can lead to increased cooperation, reduced litigation costs, and ultimately, a more successful restructuring process. Subchapter 5 vs. Chapter 11 Bankruptcy: Understanding the Difference While both Subchapter 5 bankruptcy and traditional Chapter 11 bankruptcy share some similarities, there are significant differences between the two. The primary distinction lies in the complexity, cost, and requirements associated with each option. Subchapter 5 offers a more simplified and accessible bankruptcy process specifically tailored to the needs of small businesses and individuals, while Chapter 11 is better suited for larger businesses with more complex financial structures. If you're a Tennessee resident grappling with financial difficulties, Subchapter 5 bankruptcy may provide a viable solution. Its streamlined process, reduced plan requirements, and debtor-friendly approach make it an attractive option for small businesses and individuals seeking relief from overwhelming debt. Before making any decisions, it's essential to consult with a qualified bankruptcy attorney who can guide you through the process and help determine the best course of action for your specific situation. Remember, bankruptcy is not a one-size-fits-all solution, and the outcome will depend on various factors. However, understanding the potential benefits of Subchapter 5 bankruptcy can empower you to make informed decisions about your financial future. At Kenneth C. Rannick, P.C., we specialize in bankruptcy law and can provide the guidance and support you need during challenging times. Contact us today to schedule a consultation and explore your options for a fresh start. Take control of your financial future with Subchapter 5 bankruptcy. Let us help you navigate the path to a brighter tomorrow.

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