mergenthaler mgm230 1103 b-04
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bankruptcy law, Georgia requirementsTRANSCRIPT
MGM230-1103B-04 Introduction to Business LawPhase 4 Individual Project
Sabrina MergenthalerColorado Technical University
Professor Wendy McKainSeptember 12, 2011
Bankruptcy
What is Bankruptcy?
Types of Bankruptcy• Chapters 1,3, and 5
Definitions and provisions
• Chapter 7Liquidation
• Chapter 11Reorganization
• Chapter 12Adjustments of debts of a family farmer
of fisherman with regular income
• Chapter 13Adjustments of debts of an individual
with regular income
(Cheeseman, 2010)
2 parties--Creditor & Debtor2 types of debt--Secured Vs. Unsecured
Acts • BANKRUPTCY ACT OF 1878Original article depicting the laws of
bankruptcy• BANKRUPTCY REFORM ACT OF 1978
Easy to file bankruptcyDischarge of debt
• BANKRUPTCY ABUSE PREVENTION & CONSUMER PROTECTION ACT OF 2005
More difficult to file bankruptcyLess discharge of debt
(McKain, 2011)
Purpose•Enables debtors to seek relief from debt•Restart operations•Protection from abusive activities by creditors•Prevents creditor advantages over each other•Creditor protection from debtor•Speedy, efficient, and Equitable distribution of assets•Preserves business
(M.U.S.E., 2011)
Tests for Chapter 7 Bankruptcy•Median Income Test- Does income exceed or sit below the state’s median family income index.
•Means Test- a complicated method of calculation that reflects whether the debtor has the ability to pay.
(Cheeseman, 2010)
Georgia
Requiremen
ts
Risks•Loss of assets•Irreversible•Handicaps business operations•Loss of business•Appointment of a trustee
• Most complex filing
• Favorable for businesses
• Debtors-in-possession
• No trustee
• Creditors’ Committee
• Actions of creditors suspended
• Business continues to operate
Higher Filing Fees Due to Court Fees
AdjustmentsBankruptcy
• Intended for individuals
• Similar to chapter 11
• Individuals have 90 days to define a plan
• 3-5 year plans
• Certain Requirements must be met
• Trustee appointed
• Plans may be modified
• Limitations of debt amount
• Categorizing of debt
Georgia Requirements
BENEFITS AND DRAWBACKSBenefits
• Fresh start• Protection from creditor collection efforts• Protection from wage garnishment• Protect assets claimed after filing• No minimum debt required to file
• Quickness of results• Debt discharge/reduction
Drawbacks• Decreases credit score
• Loss of assets• Irreversible
• Remains on credit history• Risk of criminal activity
• Risk of conversion to Chapter 7• Invasion of privacy
Chapter 7
• Trustee appointed
• No business future
• Suing of partners
• No discharge of debt
• Partner can buy out partner
Chapter 11
• Business will survive
• Self trustee
• Work with creditors
• Retention of assets
• Complex
Sheer & Deer AssociatesConfirmation to file
Decision•File
•TypeChapter 11
•ReasoningContinued operationsRetention of assetsAbility to work with creditorsDebt reduction/discharge
•ProcessFileContinue regular operating costsOperating reports generatedSubmit disclosure statementSubmit plan of actionCreditor/Court approvalCarry out plan
References
Marples, G. (2008). The History of Credit Cards – It All Started In The 18th Century. Historyof.net. Retrieved from http://www.thehistoryof.net/history-of-credit-cards.html
A brief History of Bankruptcy. (2011). BankruptcyData.com. Retrieved from http://www.bankruptcydata.com/Ch11History.htm
Cheeseman, H. (2010). Business Law: Legal Environment, Online Commerce, Business Ethics, and International Issues, Seventh Edition. Pearson Prentice Hall: Upper Saddle River, New Jersey
McKain, W. (2011). Colorado Technical University. Introduction to Business Law. Live Chat 7
M.U.S.E. (2011). Colorado Technical university. Introduction to Business Law. Retrieved from https://campus.ctuonline.edu/courses/MGM230/p4/hub1/hub.html
Silverman, J. & Grabianowski, E. (n.d.). How Bankruptcy Works. How stuff works.com. Retrieved from http://money.howstuffworks.com/personal-finance/debt-management/bankruptcy1.htm
Bankruptcy. (2011). State Bar of Georgia. Retrieved from http://www.gabar.org/communications/consumer_pamphlet_series/bankruptcy/
Georgia Bankruptcy Law. (2009). Georgia Bankruptcy.com. Retrieved from http://www.georgiabankruptcy.com/7v13.html