So far, stimulus payments, mortgage deferrals, and other temporary relief measures have helped coronavirus-impacted families avoid bankruptcy. But when these relief programs end, bankruptcy filings will probably increase significantly. 

Things are very uncertain now, and bankruptcy is the only effective way to restore certainty to your family’s finances. Bankruptcy halts foreclosure and other adverse actions. So, if you lost your job due to COVID-19 and fell behind on mortgage payments, you do not need to worry about losing your home. If that unemployment caused you to live on credit cards, bankruptcy typically erases credit card debt and gives your family a fresh start.

An Athens bankruptcy attorney evaluates your situation, lays out your options in terms of Chapter 7 or Chapter 13, and stands up for you until the end. These are services which no bankruptcy petition preparer can provide. The additional peace of mind you receive makes an unstable situation a little more stable.

Qualifying for Bankruptcy

In a nutshell, Chapter 7 helps people with unsecured debt, and Chapter 13 helps people who are behind on secured debt payments. Most people qualify for both types of personal bankruptcy.

All bankruptcy debtors must complete a pre-filing debt counseling class. This course, which is usually available online, only takes a few minutes and only costs a few dollars. Additionally, before the judge closes the case, all debtors must complete a similar debtor education course.

Chapter 7 filers must qualify under the means test. Their household income must be below the average figure for that household size in that state. In Georgia, as of May 1, 2020, that amount was $87,317 for a family of four. If your family earns more than that and needs to file Chapter 7 bankruptcy, an Athens bankruptcy lawyer might have some solutions based on individual and regional income and expense variations.

Chapter 13 debtors cannot have more than $1.25 million in secured debts and $420,000 in unsecured debts. These totals include both current and past-due debt. So, unless you recently bought a mansion and made the down payment with a credit card, you probably qualify for Chapter 13.

So much for the official qualifications. There are some unofficial qualifications as well. People who do not meet these unofficial qualifications can still file, but there might be a few more bumps in the road.

Unofficial bankruptcy qualifications usually involve Schedules I and J, the income and expense schedules. More on schedules below. To avoid unwanted scrutiny, most Chapter 7 debtors need to show negative monthly cash flow. The opposite is true of Chapter 13 bankruptcy. These debtors must typically show positive monthly cash flow.

Filing the Petition

To claim bankruptcy, you must file a petition. In an emergency situation, such as a pending foreclosure sale, an Athens bankruptcy attorney can submit an emergency filing. This filing usually just contains the petition, creditor matrix (list of creditors who receive notice) and a couple of supporting documents.

Eventually, to claim bankruptcy, debtors must file all necessary schedules. There are about a dozen schedules that list assets and debts. Additionally, the extensive Statement of Financial Affairs asks debtors a number of fraud-related questions which they must answer under oath.

Athens Bankruptcy Lawyers and the 341 Meeting

Normally, the 341 meeting with the trustee (person who oversees the bankruptcy for the judge) is the final hurdle to clear to claim bankruptcy.

Chapter 7 trustee meetings are normally very brief. Assuming there are no red flags, most trustees simply verify the debtor’s identity and intent. Most trustees also review a few extra-bankruptcy documents, like pay stubs and tax returns.

Chapter 13 meetings are a bit more involved. In addition to the above, the trustee puts the debtor on an allowance based on the information in Schedules I and J. Any disposable income goes to a monthly debt consolidation payment. This payment must be high enough to erase all secured debt delinquency, and some other obligations, before the protected repayment period ends.

If there are any red flags, the trustee could file a motion for turnover or other adverse action in bankruptcy court. Typically, an Athens bankruptcy lawyer resolves these matters out of court and on favorable terms.

Consult with a Knowledgeable Athens Bankruptcy Lawyer Now 

It’s relatively easy to claim bankruptcy if you have an experienced Athens bankruptcy attorney in your corner. To get the process started, contact Morgan & Morgan, Attorneys at Law, P.C. at (706) 843-2905. After-hours, virtual, and home visits are available.