When you learn about US consumer debt through media reports, chances are that you hear about dollar amounts that total in the billions and trillions. Many American adults are struggling with debt, and you may already be looking into all possible solutions if you are one of them. Some of the most common ways to reduce or eliminate debt include debt relief solutions, which do not involve court action. Another option that you may be researching is bankruptcy in Georgia, either through Chapter 7 discharge or Chapter 13 debt reorganization.

While there are benefits to resolving your debt through some of these alternatives, it is also essential that you avoid common bankruptcy scams. Unfortunately, some entities will try to take advantage of your weakened financial situation by engaging in misconduct for their gain. You will need to know the signs and indications that the company is not serving your best interests with debt options.

You avoid bankruptcy scams in Georgia by retaining a reputable law firm that focuses on Chapter 7 and Chapter 13 cases. With an Athens, GA bankruptcy lawyer on your side, you can feel confident that all services will be directed at preserving your rights and promoting your interests. Plus, you can read on for some information on what to watch for with bankruptcy scams.

Understanding Bankruptcy

Before digging into the problems with bankruptcy and misconduct, you should get a basic understanding of the two types of bankruptcy that most individuals will consider. Chapter 7 is one you might know as discharge bankruptcy in which your debts are eliminated. There are two important factors to keep in mind:

1. Eligibility rules are strict, so you only qualify if you meet one of two tests. Your income must either be under the state median level, or you must meet the Means Test that assesses income along with important expenses.
2. Chapter 7 includes a liquidation component, meaning your assets could be sold to satisfy your debt to creditors. However, a trustee may not liquidate assets that would not bring a decent price.

The other type of bankruptcy individuals often turn to is Chapter 13, which involves debt reorganization instead of liquidation. Your debts are rolled into a single monthly payment based on your income, and you pay creditors for 3 to 5 years under a debt repayment plan. Once your case is complete, qualifying debts are wiped out.

How Debt Relief Works

Bankruptcy is an official legal proceeding for resolving debt, but some options involve solutions without court. Because you do not have the benefit of a legal structure or rules, debt relief typically means negotiating with creditors to alleviate the financial strain. For instance:

• It may be possible to negotiate a lower amount to satisfy debt, usually through a lump sum.
• You might get the creditor to agree to extend the duration of payments.
• A creditor may be willing to reduce late fees and interest to lower your monthly payment amount.

These debt solutions may not be suitable for many debtors, which is where scams may enter the picture. In many cases, you cannot pay a sizable lump sum to close the account. With other options, you will pay for a longer time, costing you more in the long run. Companies that offer debt solution services may charge you a large upfront fee, despite knowing that these solutions are not workable in your situation.

 

Scams in Bankruptcy

Besides debt solutions that do not involve the court, some companies promise to assist with your bankruptcy case. You might see the services offered for a flat fee, at a seemingly reasonable rate. However, it is important to distinguish between companies that handle bankruptcy cases and Georgia bankruptcy law firms.

• For one, a Chapter 7 or Chapter 13 lawyer is bound to laws of professional ethics. An agency that provides bankruptcy help is not obligated to you in the legal sense.
• A bankruptcy company cannot offer legal advice, so their services are usually nothing more than giving you access to online forms with instructions.
• Keep in mind that many organizations advertising bankruptcy services will probably point you in the direction of debt solutions instead. They can make more money, and these companies do not have oversight from the court regarding fees. When you file Chapter 7 or Chapter 13, the court must review and approve attorneys’ fees.

Comparing Bankruptcy to Debt Relief

When reviewing the ways companies may scam debtors, you should be aware of how bankruptcy stacks up against the other types of debt relief. Initially, there is an advantage to filing Chapter 7 or Chapter 13 that would not be available in debt relief solutions. Upon filing, the automatic stay in bankruptcy is imposed. Creditors cannot engage in collection efforts, including lawsuits, wage garnishment, and liens on property.

In addition, with Chapter 7, your debts are discharged after a possible liquidation of assets. In Chapter 13, you wipe out debts once you complete the agreed-upon debt repayment plan. All qualifying debts are eliminated, and creditors cannot come for collection once your case is over.

With debt relief, you do not gain the advantage of the automatic stay in bankruptcy. Creditors can pursue you at will, leveraging all possible collection efforts. Even during negotiations toward an agreement, a creditor could surprise you with collection action. Still, debt relief does not carry the same consequences for your credit report compared to bankruptcy.

Additional Benefits of Bankruptcy

When you avoid the scams with bankruptcy and debt relief, you open the door to numerous benefits that deliver a strong financial future:

• By wiping out your debt, you also eliminate any communications from creditors. They cannot seek payment from you once you file for bankruptcy, since the automatic stay is in place throughout your case. Then, you have no debt to collect once your case concludes.
• Anxiety and depression are some of the most personal effects of being in debt trouble. These conditions can also turn into serious physical consequences. Bankruptcy alleviates stress when you are no longer worried about struggling to stay afloat.
• There is an undeniable effect on your credit score when you file for bankruptcy, with Chapter 7 and Chapter 13 being reported for 10 and 7 years. However, a careful look at your debt could make you realize that it could take decades to pay off if you do not opt for bankruptcy.
• When the time is right, you have access to many financial options to rebuild credit.

 

Discharge Debt in Bankruptcy

Chapter 7 and Chapter 13 are for individuals or married couples, and they both enable you to wipe out a large portion of your debt. Though every case is different, you may qualify to get rid of such debts as:

• Credit card debt;
• Medical debts;
• Personal loans; and,
• Other lines of credit.

Still, some types of debt are not dischargeable. You cannot eliminate court-ordered alimony or child support, so you will continue to owe past due amounts and future payments. Another type of court case that affects the discharge of debt is a personal injury case, in which you were found liable for a DUI accident. Fees you owe to government bodies and taxes are also not possible to eliminate through Chapter 7 or Chapter 13.

Trust a Bankruptcy Law Firm

When looking at the implications of bankruptcy scams, you realize that it is a mistake to retain services for debt relief or bankruptcy unless you are working with qualified bankruptcy attorneys in Georgia. Besides the ethical obligations and duties to the court that serve to protect you, a lawyer has meticulous knowledge of the bankruptcy process.

• You could be entitled to exemptions to protect property from liquidation in Chapter 7, so legal advice is critical. You can avoid losing assets with a proper exemption strategy.
• The focus of your Chapter 13 case, the debt repayment plan, must be acceptable to the court. It is crucial to have legal guidance when preparing the proposed plan.

In addition, it is necessary to go to court and participate in other legal proceedings in bankruptcy cases. An attorney will advocate on your behalf to ensure a smooth process for Chapter 7 or Chapter 13.

How a Bankruptcy Attorney Helps with Debt

When you retain an Athens, GA bankruptcy lawyer for assistance with your case, the initial benefit is knowing that you are going forward with the right decision. Debt relief solutions, Chapter 7, or Chapter 13 may be the best fit, depending on your circumstances. Plus, an attorney will assist with:

• Coordinating the credit counselling course that you must complete before filing bankruptcy;
• Gathering and organizing your financial documents;
• Preparing the bankruptcy petition and attachments;
• Helping you develop the Chapter 13 debt repayment plan, which must be filed early in the process;
• Explaining your exemptions and how they protect your real estate and personal property;
• Attending the creditors’ meeting with you, in which you may be asked questions about your petition and finances; and,
• Finalizing your case and obtaining the bankruptcy court’s discharge order.

Talk to an Athens, GA Bankruptcy Lawyer About Options

As you can see, there are numerous benefits that you can leverage when filing Chapter 7 or Chapter 13 bankruptcy to resolve debt. However, it is also clear that there are many companies out there trying to take advantage of you to boost their bottom line. You will need a skilled Georgia bankruptcy attorney to avoid bankruptcy scams, so please get in touch with Morgan & Morgan, Attorneys at Law, P.C. We can schedule a no-cost consultation at our offices in Athens, GA.

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