Most people in Georgia file bankruptcy because, through no fault of their own, their finances are spiraling out of control. In three or five years, Chapter 13 bankruptcy helps these people regain control. 

The bankruptcy process restores some control. Bankruptcy’s Automatic Stay is one key mechanism. It is illegal for creditors to contact debtors in bankruptcy. That means no harassing phone calls and no vehicle repossession. Also, Chapter 13 discharges unsecured debts, like credit cards and medical bills.

Further, Chapter 13 gives families the tools they need to help themselves. As outlined below, the protected repayment period is usually the heart of a Chapter 13 bankruptcy. Debtors who are behind on secured obligations, like mortgage payments or vehicle loans, make income-based catch up payments.

A qualified Georgia bankruptcy lawyer does more than guide people through this complex procedure. A lawyer also stands up for your legal and financial rights.

Qualifying for Chapter 13

Qualifying for Chapter 13 usually only requires a brief online course and a consultation with a Georgia bankruptcy lawyer.

All debtors must take a credit counseling course prior to filing. This course typically costs a few dollars and takes a few minutes.

As proficient Georgia bankruptcy lawyers, we can tell you that there are some Chapter 13 debt ceilings to deal with. Petitioners cannot owe more than $1.3 million in home mortgage and other secured debts. Their unsecured debts cannot exceed $400,000. An attorney can quickly review the debtor’s finances and determine if these limits are a problem.

An attorney also reviews the debtor’s bankruptcy record, if any. If the debtor received a prior bankruptcy discharge, a waiting period must expire before the debtor can receive another discharge. Likewise, if a prior bankruptcy was voluntarily or involuntarily dismissed, a waiting period might apply before the Automatic Stay takes full effect.

There is also an informal qualification. The debtor must have enough disposable income to fund a monthly debt consolidation payment. More on that below.

Filing Chapter 13

In emergency situations, like a foreclosure sale scheduled within the next few days, a Georgia bankruptcy lawyer can file an emergency petition, usually within a few hours of the initial consultation. Generally, however, the initial filing process might take a week or two.

The debtor must file documents that contain comprehensive information about the debtor’s assets and debts. It is very important to take some extra time and make sure these documents are accurate. Trustees (people who oversee bankruptcies for judges) now review these documents with a fine-tooth comb, mostly because of the well-publicized Real Housewives of New Jersey bankruptcy fraud cases in 2014. 

Creating a Plan with a Georgia Bankruptcy Lawyer

Of all this paperwork, Schedules I and J, the monthly income and expense schedules, might be the most important ones in a Chapter 13. 

Essentially, the trustee places the debtor on an allowance for either three or five years, depending on the debtor’s household income. After the debtor pays basic monthly bills, all disposable income goes to a monthly debt consolidation payment. That payment must be large enough to erase all secured debt arrearage before the protected repayment period ends.

Before filing paperwork, a Georgia bankruptcy lawyer works closely with a debtor to come up with a manageable payment that also meets the aforementioned legal requirements.

Modifying a Repayment Plan

Three or five years is a long time. Financial circumstances usually change several times during this period. As a result, motions to modify the repayment plan are fairly common. Do-it-yourself filers and debtors who use bankruptcy petition preparers are at a significant disadvantage here. Such motions might be common, but trustees often do not agree with them.

Income changes usually trigger motions to modify the repayment plan. At the outset of a case, a Georgia bankruptcy lawyer usually works with debtors to make the debt consolidation payment as high as possible. High payments might allow the debtor to finish bankruptcy early. Additionally, high payments give debtors some negotiation room if they need to lower those payments later.

If debtors are unable to make the monthly payments, conversion to Chapter 7 is usually an option. That conversion means no more payments and a much faster fresh start. Most Chapter 7s close in a few months as opposed to a few years. Your Georgia bankruptcy lawyer will help you understand this option better.  

Consult a Seasoned Georgia Bankruptcy Attorney about Your Options

Depending on the specific facts, Chapter 13 usually takes either three or five years. For a free consultation with an experienced Georgia bankruptcy lawyer, contact Morgan & Morgan, Attorneys at Law, P.C. at (706) 843-2905. After-hours, home, and virtual visits are available.