Thousands of people in and around Athens struggle with mountains of unsecured debt. These individuals basically have two choices. They can continue to struggle and hope for the best, or they can take drastic action and take control of their debt problems.

The average cardholder has more than $7,000 in credit card debt alone. Other unsecured debts, such as medical bills, could add thousands of dollars to that total. As a rule of thumb, if the amount of unsecured debt is much higher than this average amount, it’s almost impossible to pay off. The interest alone is often more than $2,000 a year.

Once a Georgia bankruptcy lawyer files a voluntary Chapter 7 proceeding, the judge normally discharges most unsecured debts in only a few months. In many cases, Chapter 7 almost is that simple. So, a financial fresh start for your family is usually within easy reach.

Qualifying for Chapter 7

This section is quite short. Almost everyone qualifies for Chapter 7 bankruptcy. Your household income must be less than the average amount for that household size and geographic area. In Georgia, as of May 1, 2020, that amount is $87,313 for a family of four.

If your household income is near the limit, do not fret. A Georgia bankruptcy lawyer can submit a detailed income/expense statement. That should eliminate the problem.

All bankruptcy debtors, regardless of income or type of filing, must also complete a pre-filing credit counselling course and a post-fling debt management course. These classes are usually available online. They typically only cost a few dollars and only require a few minutes.

Exemptions

Business Chapter 7s are normally liquidations. State property exemptions do not apply to business property. Individual Chapter 7s are quite different. Since bankruptcy is designed to give people fresh start, state law protects most private property, including:

• House: Georgia law exempts up to $43,000 in home equity. Generally, if people have lived in their home for less than ten years, they have very little equity. These loans are amortized. So, their monthly payments mostly go to prepaid interest.
• Car: The same thing applies to motor vehicles. Additionally, most motor vehicles depreciate quickly. So, most used cars have substantial equity, but almost no economic value.
• Personal Property: Almost all the furniture, appliances, electronics, and other items in your home fall under the personal property exemption. Moreover, the as-is cash value is the only amount that matters. Most items could only fetch pennies on the dollar in a garage sale.
• Retirement Account: 401(k)s, IRAs, and other retirement accounts are all 100 percent exempt regardless of their monetary value.

Skilled Georgia bankruptcy lawyers know how to maximize these exemptions. Homes are a good example. Typically, the as-is cash value is much lower than the fair market value. Many home investors initially offer a tiny fraction of the FMV for an as-is cash sale.

The 341 Meeting

In a Chapter 7, the trustee (person who oversees the bankruptcy for the judge) normally only looks for red flags, verifies the debtor’s identity, and asks some basic yes/no questions about the filing (e.g. did you file this voluntary petition voluntarily).

Trustees normally examine tax returns to look for recent income spikes. Such fluctuations could indicate possible fraud. Some trustees want to see additional financial documents as well, such as bank statements and insurance declaration pages.

All debtors must allow trustees to inspect their picture identification cards. A drivers’ license is good enough. In lieu of a drivers’ license, almost any government-issued photo ID will suffice.
Generally, your Georgia bankruptcy lawyer asks the yes/no questions. Typically, the questions and answers come from a script.

Automatically Dischargeable Debts

Credit cards, medical bills, payday loans, and most signature loans are almost always dischargeable in bankruptcy. “Discharge” means the legal obligation to repay the debt disappears. The account might still appear on your credit report with a notation like “discharged in bankruptcy.”

Furthermore, the collateral consequences of debt remain. Assume Jerry owes college tuition. If Jerry files bankruptcy, he does not have to pay the debt and it is illegal for the school, or anyone else, to try and collect it. However, the school could do something like withhold his transcript. Jerry, or his Georgia bankruptcy lawyer, must address this issue separately.

Semi-Dischargeable Debts

Other unsecured debts are only dischargeable in limited situations. Let’s return to the Jerry example and change the facts. Assume Jerry’s debt is not unpaid tuition but a delinquent student loan. Student loans are unsecured debts. However, they are only dischargeable if the debtor can show an “undue hardship.”
Congress never defined this phrase, so courts must interpret it. Different courts have different rules regarding student loan discharge.

Other semi-dischargeable unsecured debts include back taxes and FSOs (Family Support Obligations), like alimony and child support.

Call a Georgia Bankruptcy Attorney to Know More about Chapter 7

Chapter 7 quickly eliminates most unsecured debt. However, it is important to understand the consequences of filing bankruptcy. Chapter 7 does not eliminate certain tax liability debts, government-imposed fines, most student loans, child support, spousal support, restitution, forfeitures, and certain other types of debts. Getting legal help for filing Chapter 7 bankruptcy can be helpful. For a free consultation with an experienced Georgia bankruptcy lawyer, contact Morgan & Morgan, Attorneys at Law P.C. on (706) 843-2905. Our main office is conveniently located in Athens.

Christopher Ross Morgan

Christopher Ross Morgan

Christopher Ross Morgan focuses on bankruptcy cases, specifically Chapter 7 and Chapter 13 cases. Christopher also takes on Disability and Workers’ Compensation cases. As one of the most accomplished Chapter 7 and Chapter 13 attorneys in Athens, Georgia, he has fought cases through jury trials and argued cases in front of the U.S. District Court, Northern and Middle District of Georgia.