Filing Chapter 13 bankruptcy is not an easy decision to make. Beyond the financial aspects of the decision, you also deal with an emotional toll. Many people feel shame if they find themselves in a situation where they must file for bankruptcy. Add to that the worry that their creditors may still come after them for their debts later, and the decision to file becomes more stressful.

Before you file bankruptcy in Georgia, it’s essential to understand what will happen after you file. Which debts are eligible for Chapter 13 relief? Which ones aren’t eligible? How does the process work?

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is essentially a debt reorganization plan. In Chapter 13, the petitioner must present a plan for repaying debts for the court’s approval. This differs from a Chapter 7 bankruptcy because, in a Chapter 7 bankruptcy, anything that isn’t exempt can be sold to satisfy debts. With a Chapter 13 filing, you have the opportunity to satisfy creditors by making payments through a Trustee over time.

How Does Chapter 13 Bankruptcy Work in Georgia?

When you file for Chapter 13 bankruptcy, one of the first things to happen is a bankruptcy trustee gets assigned to your case. Think of the trustee as a manager over your bankruptcy. With Chapter 13, that means the trustee is in charge of overseeing your repayment plan.

The trustee is responsible for facilitating a meeting of your creditors. The trustee will ask you questions about your debts. They will also ask you about your assets. Your creditors are allowed to attend this meeting and ask you questions as well.

This meeting happens before the court confirms your bankruptcy. Often, creditors don’t exercise their right to attend the first meeting of creditors. Instead, you will answer the trustee’s questions (while under oath), and the trustee will review your repayment plan.

You begin making payments when your repayment plan has been submitted and approved by the trustee. For your bankruptcy to provide debt relief, you must make your payments on time and follow your repayment plan to pay off your debts. You will also be required to pay non-dischargeable debts while making bankruptcy payments. Non-dischargeable obligations include things like child support and alimony.

Bankruptcy judges aren’t part of the first meeting of creditors. This is done to keep the judges impartial with their final decision regarding confirming or denying a bankruptcy petition.

The Automatic Stay

When the Georgia Department of Revenue receives a Chapter 13 bankruptcy petition, an automatic stay is issued. This stay prevents creditors from coming after the petitioner. The stay doesn’t apply to student loans, and it doesn’t apply to certain kinds of tax debt.

When the stay is in effect, creditors can’t call demanding money, garnish wages, or file lawsuits against the petitioner. The bankruptcy court will notify creditors that there is a bankruptcy petition pending and an automatic stay in place. Remember, the stay may only be temporary.

Co-signers and joint owners of accounts are also protected by the automatic stay. For example, if both spouses are named on an unsecured line of credit, but only one of them is filing bankruptcy protection under Chapter 13, the creditor can’t call the other spouse looking for payment. Tax debt is an exception to this protection because the state can continue to attempt to collect a tax debt.

The Automatic Stay helps someone filing Chapter 13 save their homes from foreclosure. During bankruptcy, the homeowner is allowed a reasonable timeframe to catch up on mortgage payments. This timeframe is agreed upon during the bankruptcy hearing.

If the homeowner misses mortgage payments again, the house returns to the foreclosure proceeding. Additionally, the homeowner can still lose the house if the bank can complete the foreclosure sale before the bankruptcy petition is filed.

It’s important to note that the Department of Revenue can still pursue actions to collect tax debt even with the stay in place. Also, bankruptcy does not absolve the taxpayer from future filing and paying of taxes. Any tax returns that are due during the time of bankruptcy must be filed and paid if payment is required. Failure to keep your taxes current during bankruptcy can result in the bankruptcy case being dismissed.

Secured and Unsecured Debt

When you file for bankruptcy in Georgia, you need to understand the difference between secured and unsecured debt. Secured debt has collateral that backs the debt. Examples of collateral are your home or your car.

With secured debts, you will either be required to pay as previously agreed or surrender the asset. A long-term debt, like a mortgage, won’t have to be paid in full through your bankruptcy plan. However, you will need to catch up on any back payments through your plan unless you want to surrender the collateral. If you choose to surrender the collateral, that debt becomes a non-priority unsecured debt.

Unsecured debts are divided into two categories: priority and non-priority. Priority unsecured debts must be paid in full through your Chapter 13 plan. These include things like specific tax debts, alimony, and child support.

Non-priority unsecured debt comprises most of the debts discharged through Chapter 13 bankruptcy filings. These include credit cards, medical bills, utility payments, and personal loans. Student loans also fall into this category, but they are non-dischargeable unless you can prove in a separate case that it will be a hardship to continue paying them. Student loans don’t have to be repaid fully through your payment plan, though, because they are considered long-term debts.

The Discharge Order in Georgia

When you have successfully completed the repayment portion of your Chapter 13 bankruptcy, the bankruptcy court will issue a discharge order for your case. The discharge order is what you’ve been working toward during the entire bankruptcy process. Typically, the bankruptcy discharge is a permanent order.

When you receive your discharge order, you are no longer responsible for the debts that were dischargeable through bankruptcy. While these orders are typically permanent, there have been occasions where a discharge order was revoked. Generally speaking, that only happens if the trustee discovers some sort of bankruptcy fraud was committed when you filed your Chapter 13 bankruptcy petition.

Discharged debts are erased. There is no more payment required for discharged debts. Creditors can’t attempt to collect on a discharged debt. If they do, they’re breaking the law, giving you the right to pursue legal action against the creditor.

Both the bankruptcy discharge and the automatic stay stop collection efforts by creditors. The discharge is permanent and occurs after your bankruptcy case has been successfully completed. The automatic stay happens automatically when you file a bankruptcy petition, and it’s a temporary solution.

Certain conditions must be met before a bankruptcy discharge is issued. The petitioner must attend the meeting of creditors, file all necessary paperwork, and provide any supporting documentation the trustee requests. Additionally, the petitioner must complete a credit counseling and financial management course. The trustee may request other things of you depending on your unique circumstance.

A bankruptcy discharge erases your debts. Medical bills and credit card accounts will have a zero balance on your credit reports. The discharge helps you build a path of renewal. Creditors that were paid in part or in full within the bankruptcy plan cannot initiate or continue any collection or legal action against you to collect further payment.

Bankruptcy discharges are limited by the US Bankruptcy Code. The limits are in place to keep people from abusing the system. With a Chapter 13 bankruptcy, you must wait at least six years before seeking a new bankruptcy discharge.

Some debts are non-dischargeable. Those debts include long-term obligations like your mortgage, alimony, child support, specific tax debts, government-funded student loans, debts that came from a death or personal injury case related to a DUI, and debts of restitution or fine included in a criminal sentence. If your chapter 13 bankruptcy plan doesn’t fully pay the debts, you will be responsible for them after your case closes.

Some debts can be discharged provided the creditor doesn’t file a successful action to have them declared non-dischargeable. Those include obligations resulting from obtaining property or money under false pretenses, debts for certain forms of fraud, debts awarded in a civil case where the petitioner was ordered to pay restitution, or damages due to personal injury resulting from a willful or malicious act.

Under Chapter 13, some debts are dischargeable that wouldn’t be if you had filed for Chapter 7 relief. Those include debts incurred due to willful or malicious damaging of property, debts from property settlements in a divorce or separation proceeding, and debts you got to pay nondischargeable tax obligations.

Remember, only debts incurred before filing for bankruptcy in Georgia are dischargeable. Any debt you incurred after filing your Chapter 13 petition is still your responsibility. Bankruptcy proceedings don’t retroactively include new obligations.

Before the court issues the discharge, you must meet specific requirements. You must certify that all domestic support obligations have been met. You must certify that you haven’t received a discharge in a previous bankruptcy case within a specified period. You must have completed the approved financial management course, provided one is available.

Get in Touch with Our Chapter 13 Bankruptcy Lawyer Immediately

When you file Chapter 13 bankruptcy in Georgia, you will repay your debts through an agreed-upon repayment plan. Some of these debts are dischargeable, and some aren’t. Creditors paid through your plan cannot legally come after you during the process or after the bankruptcy is discharged. Contact the experienced attorneys at Morgan & Morgan if you need help with creditors or filing your Chapter 13 bankruptcy in Georgia.

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