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The Ultimate Guide to Atlanta, Georgia Bankruptcy
This website has all the information you need to know about filing for bankruptcy in the State of Georgia. Start by deciding which form of bankruptcy you want to learn about: Chapter 7 or Chapter 13. Then, use the table of contents to navigate the page.
There’s a lot of detail here so please contact our law firm with any questions that come up. We’re here to help you.
Chapter 7 Bankruptcy
In Chapter 7 bankruptcy, you have to hand over all your non-exempt property to the court-appointed bankruptcy trustee to convert it into cash to pay your creditors. Both the creditors and you will meet, and about 60 days after the hearing, you will receive a debt discharge.
Chapter 13 Bankruptcy
In Chapter 7 bankruptcy, the court-appointed trustee sells the debtor’s assets to pay off the creditors. However, in Chapter 13 bankruptcy, there is no outright sale of debtor’s property. Instead, the debtor is allowed to set up a payment plan with the trustee to pay back debt over a period of laid downtime.
WHAT IS CHAPTER 7 BANKRUPTCY?
Chapter 7 bankruptcy, sometimes referred to as a ‘total debt liquidation bankruptcy’, is a legal proceeding. Once filed, you have to hand over all your non-exempt property to the court-appointed bankruptcy trustee to convert it into cash to pay your creditors. In case of exempted assets, the trustee files a report of no distribution with the court, meaning there will be no distribution to the creditors.
During bankruptcy proceedings, the trustee will preside over a hearing in which both the creditors and you will meet under Section 341. This first meeting facilitates the creditors in asking you specific questions outlined in the US Bankruptcy Code. After about 60 days of this hearing, you will receive a discharge that will save you from all dischargeable debts.
Advantages of Filing for Chapter 7 Bankruptcy
The notion that filing for a Chapter 7 bankruptcy will ruin your credit for years is not correct.
People who go bankrupt and resort to filing Chapter 7 bankruptcy can immediately start rebuilding their credit. And it takes only about 18 months of being regular in timely payment of bills to re-establish a good credit rating.
For instance, people who had filed under Chapter 7 bankruptcy were able to buy a home in 1-1.5 year after receiving a Chapter 7 discharge.
Yes, you read that right.
Prevent Creditor Harassment
In the normal course of bankruptcy, the person who goes bankrupt gets inundated with calls from creditors, either on the phone or physically, demanding their invested money back. However, filing Chapter 7 bankruptcy saves you from all this.
Once you file a chapter 7, creditors are notified and get automatically debarred by law from calling you or taking collection.
If they persist, you may take legal action against them. They can only do so by obtaining a permission from the bankruptcy court.
This not only saves you from harassment but provides a much-needed breathing space.
Once the Chapter 7 bankruptcy proceedings conclude, several types of mortgages get discharged, meaning you will no longer owe them. These include three-year-old income taxes, rent and utility bills of the past, medical bills and credit card debt.
The are several debts that don’t get discharged under Chapter 7 bankruptcy:
- Alimony and child support
- Student loans
- A monetary penalty imposed by the court
How Often Can You File Chapter 7 Bankruptcy?
If you have been granted a Chapter 7 discharge within the past eight years, you cannot file it again. However, you can file a Chapter 13 bankruptcy within four years.
Do You Qualify for Chapter 7 Bankruptcy in Georgia?
Although laws and rules on bankruptcy may differ from state to state, you can qualify for Chapter 7 bankruptcy in Georgia if you meet its specific requirements:
- First, you need to qualify the ‘means test’.
- Second, you should have assets that can be liquidated to repay creditors.
Georgia does offer exemptions that protect most property in Chapter 7 cases.
Furthermore, you are allowed to keep up to $21,500 in value on your home, if you are single. For married couples, this value is $43,000. Subtract what you owe on the home from the worth of the home to get this value.
If the entire homestead exemption is not availed, $5,000 of that exemption can be extended towards any other property that you wish to retain.
Can You Keep Your Car/House When You File Chapter 7 Bankruptcy?
Georgia law allows keeping up to $5,000 worth of vehicles and $5,000 of personal property. Attorneys well versed in the bankruptcy laws of Georgia can handle these rules and regulations efficiently.
As far as the house is concerned, you can keep it under two conditions:
- You are current with your mortgage payments at the time of filing.
- The state laws permit exemption of all the equity in the property.
Similarly, for retaining your car in Chapter 7 bankruptcy, you will need to be current with your loan payments and the state laws allow exemption of equity on your vehicle. The best part is that it takes a relatively short period for getting a bankruptcy Chapter 7 discharge. You can get it within four to six months from the date of filing.
Does Everyone Qualify for Chapter 7 Bankruptcy?
Unfortunately, everyone doesn’t qualify for Chapter 7 bankruptcy. This is due to the stringent conditions laid out in the Bankruptcy Abuse Prevention and Consumer Act of 2005.
Debtors need to:
- Prove that they have no reasonable alternative to bankruptcy.
- Prove that they have made good-faith efforts to resolve the debt problem but are unable to pay.
- And it requires passing the ‘means test’ to declare bankruptcy.
The Act also mandates that you deposit the following documents to prove your eligibility for bankruptcy. These include:
- Latest payroll statement.
- List of your debts.
- List of your average monthly household living expenses.
How to File Chapter 7 Bankruptcy
Filing Chapter 7 on your own is fraught with risks, as you may not be as knowledgeable as an experienced Chapter 7 bankruptcy attorney. A qualified attorney can take you through the steps in the bankruptcy process and provide correct guidance in this matter.
First of all, you need to take a ‘means test’ to determine whether you are eligible to file a Chapter 7 bankruptcy petition.
To qualify, your income needs to be lower than the median income of your state. In Georgia, the median income for a family of two stands at $50,712 per year.
An income higher than the state’s median income may disqualify you from filing for bankruptcy under Chapter 7. However, if you don’t have any disposable income or it is too little then you will be eligible to file for Chapter 7 bankruptcy.
Your attorney will calculate this for you by collecting all information pertaining your monthly income and expenses.
Next, you are required to take a court-approved credit counseling course and attach the certificate of completion with your petition. One can take this course online, and it takes just a few hours.
You must attach schedules with the bankruptcy petition.
The schedules are nothing but a list of your entire income and debts. This is an important step, and you must include all the debts on your schedule.
Why do I say this?
If you fail to include a debt, it will not be discharged at the end of the process. Once you file your petition, it will prevent your creditors from pursuing collection without a court order.
Appointment of a Trustee
The United States Trustee selects the trustee for Chapter 7 bankruptcy cases on a random basis. The primary job of a Chapter 7 trustee is to liquidate assets for the benefit of creditors. For this, the trustee will review your petition and schedules, filed in the court and may also ask for more information. Although in 90 percent of the cases there are no assets available for liquidation, due to exemption, the Chapter 7 trustees still distribute around $1.5 billion each year.
Section 341 – The Meeting of Creditors
As already mentioned, this is the first meeting of creditors with you and is presided over by the trustee. Under this section, the creditors are permitted to cross-examine you to find out whether you are holding any assets that can be sold to repay them. The trustee also investigates any fraudulent transfer of property by you before filing.
Chapter 7 helps to release the following debts:
- credit card
- medical bills
- rent and utilities that are due
- other unsecured debt.
The trustee will sell a portion or all of your non-exempt property to pay off the creditors. The exempted property cannot be disposed of by court and remains safe.
FIND A SEASONED ROSWELL BANKRUPTCY ATTORNEY AT GALLER LAW FIRM
WHAT IS CHAPTER 13 BANKRUPTCY?
If you are considering filing for bankruptcy, you can do so under Chapter 13 bankruptcy, variously known as ‘wage earner’s plan,’ ‘individual debt adjustment,’ ‘individual debt consolidation’ or ‘repayment plan,’ depending upon your eligibility. If you have a regular income, a Chapter 13 bankruptcy enables you to develop a plan to repay all or part of your debts.
Under Chapter 13 bankruptcy, you get three years to repay, if your monthly income is less than the state median and five years if it is more. In no case, can you extend the repayment plan to more than five years.
What Qualifies You to File Chapter 13 Bankruptcy in Georgia?
You can file chapter 13 bankruptcy if you:
- Wish to keep the mortgaged property and need time to bring the debt to a manageable level by restructuring payment.
- Have not qualified for a Chapter 7 bankruptcy under the ‘means test’.
- Want to avoid foreclosure for missed house payments by making up for it.
- Want to take advantage of the flexibility of a Chapter 13 plan in obtaining a discharge of debts that are not dischargeable in a Chapter 7 plan.
- Have recently filed a Chapter 7 case, thereby becoming ineligible for another discharge.
- Want to strip a junior lien from their residence.
Are You Eligible to File Chapter 13 Bankruptcy in Georgia?
In Georgia, you can file a Chapter 13 bankruptcy for personal bankruptcy and not as a business. Let us see the eligibility criteria:
The means test determines your disposable income, based on your household income as compared to the median income of the state.
Disposable Income = Total monthly income – Regular and necessary expenses.
The regular and necessary expenses may include groceries, utilities, house payments, rent, insurance, car payments, medical fees, and education and child care expenses.
If your income exceeds household expenses, you become eligible for filing a Chapter 13 bankruptcy. Income under Chapter 13 means wages from employment, earnings from self-employment, income from interests, pension income, social security, disability benefits and any other source of steady income. You can also consider the monetary contributions of family members or friends as income.
Prior dismissal: If you have filed for a Chapter 13 bankruptcy in the last 180 days and it has been dismissed, you become ineligible for filing. The dismissal may be due to your willful failure to appear before the court or due to non-compliance with court orders. It may also get voluntarily dismissed if the creditors approach the bankruptcy court for recovery of your property on which they hold liens.
Debts exceeding limits: If your secured debts exceed $1,149,525 and unsecured debts exceed $383,175, you don’t qualify for filing a Chapter 13 bankruptcy. Debt guaranteed against collateral is called a secured debt. In case of failure to pay back the debt, the creditor can utilize the collateral to realize the loan. Unsecured debt, on the other hand, has no collateral. This includes medical bills, student loans, and credit card bills.
Eligibility requirements to file Chapter 13
You can take these steps to prove your eligibility:
- Attend a Georgia bankruptcy trustee approved 341 meeting of creditors.
- Give evidence of reliable income by submitting your W-2 or 1040 income tax return.
- Prove that your secured and unsecured debts are within the legal limits.
- Confirm you have not filed a Chapter 7 bankruptcy in the last four years or Chapter 13 bankruptcy in the last two.
File Bankruptcy With the Help of an Atlanta Chapter 13 Bankruptcy Attorney
You can file a Chapter 13 bankruptcy case with the bankruptcy court serving the area of your domicile or residence. There are three different bankruptcy district courts in Georgia:
- Georgia Middle District Court
- Georgia Southern District Court
- Georgia Northern District Court
The Georgia Northern District Court takes care of all cases pertaining to Atlanta.
Documents you have to submit:
- A schedule of current income and expenditures.
- Schedules of assets and liabilities.
- A schedule of unexpired leases and executory contracts.
- Statement of financial affairs.
- Certificate of credit counseling.
- Debt repayment plan, if developed through credit counseling.
- Proof of any payment received from employers 60 days before filing.
- Monthly income statement.
- The holding of any federal or state qualified education or tuition accounts.
Also, you need to provide your latest copy of tax return, returns for prior years and also those filed during the case.
Information you have to furnish:
- List of all your creditors and how much you owe them.
- Your income source, frequency and amount.
- List of properties you own.
- List of your monthly living expenses.
The Chapter 13 Discharge
The Chapter 13 bankruptcy discharge process is a complex process and has undergone some recent changes. You need to take the services of a competent Atlanta Chapter 13 bankruptcy attorney prior to filing for bankruptcy.
Once the bankruptcy court grants a Chapter 13 discharge, you will be released from all debts provided by the plan, with limited exceptions. This also frees you from the legal actions of your creditors. Debts not discharged in Chapter 13, include long-term obligations, such as home mortgage, alimony, child support, etc.
The whole process of filing for a Chapter 13 bankruptcy is complex and requires hiring an attorney.
Doing without one to save on legal fees is ill advised, since there are many hurdles to be crossed and one mistake can really spoil your case.
Obviously, a Chapter 13 bankruptcy doesn’t eliminate your debt like in a Chapter 7. However, some of the benefits include:
- You’ll avoiding foreclosure on your home.
- You’ll have the opportunity to make up missed auto or home payments.
- You’ll have the opportunity to repay back taxes.
Let our Georgia chapter 13 bankruptcy lawyers streamline the bankruptcy process for you.