As 2020 closes, more people are wondering, Am I eligible for Chapter 13 bankruptcy? During coronavirus lockdowns, many homeowners took advantage of mortgage deferrals and other bank-offered temporary financial relief programs. When these programs ended, as far as the banks were concerned, the deferred payments suddenly became late payments. So, many of these people suddenly found themselves with two or three delinquent mortgage payments to deal with. Since banks can legally start foreclosure proceedings after one missed payment, these homeowners needed to take prompt action.

The good news is that most of these individuals are eligible for Chapter 13 bankruptcy. As outlined below, the qualifications are relatively straightforward. Additionally, the benefits of a Chapter 13, especially for homeowners, go well beyond immediate relief from foreclosure proceedings and other adverse actions. Only a skilled Athens bankruptcy lawyer can unlock all these short- and long-term benefits.

Benefits of Chapter 13 Bankruptcy in Athens, GA

In a nutshell, Chapter 13 prevents creditors from pressuring debtors, and it helps people pay their debts on their own terms. This relief is only available through bankruptcy.

Section 362 of the Bankruptcy Code, which normally takes full effect immediately upon filing, prohibits most forms of adverse creditor actions, such as:

• Foreclosure,
• Creditor harassment,
• Repossession,
• Wage garnishment, and
• Collection lawsuits.

Furthermore, Chapter 13 allows debtors to place all their past-due secured debts into one big pile and repay them gradually over time. The income-base protected repayment plan, during which time the Automatic Stay remains in effect, lasts up to five years.

Additionally, these benefits are available at little cost. A bankruptcy filing is not as hard on your credit score as you might think.

Formal Qualifications to File for Bankruptcy in Georgia

All Chapter 7 debtors must complete an approved pre-filing credit counselling course. By the time they connect with an Athens bankruptcy lawyer, most people have already completed at least one such class. So, this requirement is usually not a problem.

Prior to discharge, all Chapter 13 debtors must complete a debtor education course. These courses, which are usually available online, cost a few dollars and require a few minutes. Other debtors choose to attend a free seminar, which is sponsored by the bankruptcy court. These seminars, which normally last about two hours, often contain some nuggets of wisdom which help debtors maximize their fresh starts.

There are also some financial qualifications. The petitioner’s secured debt cannot exceed $1.25 million, and the unsecured debt load cannot exceed $400,000.

These sound like very large numbers. However, they include both current and past-due debt. When considering things like student loans, credit cards, and all other forms of unsecured debt, it is not too unusual to have $200,000 or more. As for secured debt, a large house in some areas of Atlanta could easily cost close to $1 million.

If the debtor does not financially qualify, other options are available, such as non-bankruptcy debt negotiation. Sometimes, if an Athens bankruptcy lawyer simply threatens to file, the moneylender caves in and agrees to a very favorable deal.

Informal Qualifications for Chapter 13 Bankruptcy

As mentioned, Chapter 13 debtors must make a monthly debt consolidation payment. Based on the income and expense information provided in Schedules I and J, the debtor must have the wherewithal to make these payments.

These payment amounts obviously vary significantly, depending on the amount of debt to be repaid. Generally, however, the monthly debt consolidation payment is about the same size as a rent or mortgage payment. Therefore, many debtors must significantly alter their financial priorities. This realignment is a necessary, and ultimately beneficial, part of the process.

To make these payments, most debtors must drive for Uber or pick up another side hustle. Additionally, eating at a restaurant that does not require ordering at a counter becomes a rare luxury.

Maintaining these habits after the bankruptcy closes is one of the best ways to quickly build a financial reserve. After just a few months of additional sacrifice, most families have several thousand dollars. That’s usually enough to weather almost any financial storm, such as serious illness or job loss, that strikes in the future.

Ask an Athens Bankruptcy Lawyer from Gerald Miller, P.A.

If you’re wondering am I eligible for Chapter 13 bankruptcy, know that most people are eligible. For a free consultation with an experienced bankruptcy lawyer in Athens, contact Morgan & Morgan, Attorneys at Law, P.C. After-hours, virtual, and home visits are available.