When your debt is spiraling out of control and you are unable to keep up with monthly bills, it is understandable that you would want to look at bankruptcy for Athens as a solution to financial stress. Creditors may already be calling with threats to take collection action, and you are facing an uphill battle with trying to get on top of debt. It is frustrating when you are struggling and making cuts to your budget just to pay the minimum amount due whenever possible. Unfortunately, much of these funds go toward interest and late fees instead of the underlying balance.

If you are seeking a legal solution to resolving debt, it is essential to review a comprehensive guide to bankruptcy for Athens, GA residents. There are different forms of bankruptcy under the US Bankruptcy Code, including Chapter 7 and Chapter 13. Both types are intended for individuals who need help with debt, and the result is discharging qualifying debt. However, these bankruptcy cases involve different proceedings, rules, and eligibility requirements.

Because of the complicated laws, you will need qualified legal help with Chapter 7 or Chapter 13 bankruptcy. Not only is the process challenging, but it is important to get advice and counsel on the type of case that provides the greatest benefit for your situation. While you should consult with an Athens, GA bankruptcy lawyer about your options, an overview is useful.

Overview of Bankruptcy Laws in Georgia

Regardless of the type of case you file and how you qualify as a debtor, US bankruptcy laws aim to help resolve debt and give the filer a fresh financial start. Many cases are solely intended for individual debtors or married couples filing jointly, as opposed to businesses. Chapter 7 and Chapter 13 are the most common cases for individuals, who are usually attempting to resolve consumer debt. These cases work very differently in terms of the rules and treatment of your debt, as well as how long the bankruptcy process takes.

However, with both, it is possible to discharge qualifying debts. Keep in mind that you must qualify under the strict eligibility rules under the US Bankruptcy Code. You must also comply with all legal requirements for a Chapter 7 and Chapter 13 case before the bankruptcy court will issue the order of discharge. You will be debt-free and creditors cannot pursue you for additional amounts.

Chapter 7 Bankruptcy Facts in Georgia

Chapter 7 bankruptcy laws offer the most direct means of getting rid of debt because there is a straight discharge of all qualifying debt after the case. This will probably be the best option for many debtors, allowing you to eliminate what you owe and move forward. There is a catch because of two factors in Chapter 7 bankruptcy:

1. You must qualify based on your income. It is possible to be automatically eligible if your earnings fall below the state median income for Georgia, which considers your household size. If you do not meet this test, you may qualify for Chapter 7 under the Means Test. With this analysis, your income is reduced by certain expenses.
2. Chapter 7 is a liquidation bankruptcy, which means the bankruptcy trustee can sell your assets to satisfy your debt to creditors. Fortunately, you can protect real estate and personal property through exemptions. Another bonus is that the trustee will usually decline to sell assets that are not profit-producing.

Understanding Chapter 13 Bankruptcy in Georgia

There is another way to discharge debt through Chapter 13, and the eligibility rules are not so strict. This type of bankruptcy may be your only option if your income is too high. For Chapter 13, you just need to have a job as a source of income. Even if you do qualify for both cases, you might prefer to file for Chapter 13 regardless. Under these rules, there is no liquidation of assets by the bankruptcy trustee. If you have significant real estate and personal property holdings, Chapter 13 may suit your needs.

Instead of liquidation, Chapter 13 bankruptcy cases work to pay back creditors through a debt repayment plan. You enter into a plan to pay every month at an amount you can afford, which is why having a job is a necessity. Still, you will end up only paying a portion of what you owe creditors because your debt is restructured. The debt repayment plan is in effect for 3 to 5 years, at which point your case is over.

Pros and Cons of Two Types of Bankruptcy in Georgia

You can see some of the benefits and drawbacks after reviewing the basics of Chapter 7 and Chapter 13, but some additional information on the pros and cons is useful.

• With Chapter 7 discharge, you can typically complete the requirements and obtain a discharge order within 5 to 6 months. The timing will depend on the liquidation process if the trustee decides to sell. If you file Chapter 13, the case will be at least as long as the 3 to 5 years of the debt repayment plan.
• Chapter 13 involves the extra task of developing your debt repayment plan, which you propose to the court and creditors. They may not accept, and you will need to modify the plan.
• Your home may be at risk with Chapter 7 because you cannot discharge your mortgage. With Chapter 13, you can work arrearages into your debt repayment plan. By paying your mortgage throughout the 3 to 5 years, you discharge the arrearage amounts.

How the Bankruptcy Process Works in Georgia

Getting started with a Chapter 7 or Chapter 13 case begins well before you file your paperwork since you must complete a credit counseling course approved by the court. In addition, there is a great deal of preparation to gather and organize financial documents. You will need all paperwork that involves your assets, income, expenses, and debts. Additional steps in the bankruptcy process include:

• You must prepare and file the Chapter 7 or Chapter 13 bankruptcy petition, along with the necessary schedules.
• The automatic stay against creditors goes into effect the day you file, meaning creditors cannot seek payment from you throughout your case.
• You will be required to attend the meeting of creditors, where your Georgia bankruptcy attorney will also be present. Creditors will ask questions about your bankruptcy petition and finances.
• When your case is complete and you meet all requirements, you can obtain a final discharge order from the bankruptcy court.

Myths About Bankruptcy in Georgia

There is a significant amount of misinformation about Chapter 7 and Chapter 13, and it may interfere with your ability to make the right decisions for your situation. Debunking the myths about bankruptcy is informative.

Myth: All debts are the same. This is not true, since you may have both secured and unsecured debts. When your debt is backed by collateral, you have a secured loan that is not dischargeable in bankruptcy. Your mortgage, secured by your home, is one example.

Myth: You can discharge all debt in bankruptcy. There are specific debts that are prohibited from being wiped out in Chapter 7 or Chapter 13, including alimony and child support. Amounts owed to a court for a criminal or civil case are also not dischargeable.

Myth: The automatic stay prevents foreclosure. The automatic stay may initially bar the lender from foreclosure, but the laws allow the bank to request that the bankruptcy court lift it. If the motion is granted, you could face foreclosure proceedings.

Myth: Your credit will never recover. On the contrary, your score could get a boost after your case after some time. The matter does stay on your credit report for 10 years for Chapter 7 and 7 years for Chapter 13 bankruptcy. However, consider how long it might take to pay off creditors without the bankruptcy process. You may not be debt-free for decades.

Tips for Rebuilding Credit Post-Bankruptcy

You can begin restoring your credit even while the Chapter 7 or Chapter 13 case remains on your report. For one, if you are continuing to pay your mortgage, this will be reported to the credit bureaus. Plus, you are creating a positive track record by paying all utilities and other monthly bills on time, in full. There are also secured credit cards available, where you deposit funds with the bank to make purchases.

Why Legal Help is Crucial for Bankruptcy in Georgia

This guide provides a broad overview of how bankruptcy works, but you will require many additional details to gain the advantages. Early on, you will need legal counsel to help determine whether Chapter 7 or Chapter 13 is the right fit for your goals and circumstances. An Athens, GA bankruptcy lawyer will also assist with all steps and the specific tasks that arise during the process, such as:

• Advising you on the Chapter 13 debt repayment plan to ensure it is acceptable to creditors and suits your income;
• Helping you apply for exemptions in Chapter 7 to protect the equity in your home, vehicles, and other property; and,
• Taking care of all court appearances and obtaining the final bankruptcy discharge order.

Our Athens, GA Bankruptcy Attorneys Will Provide Legal Support

This comprehensive guide to bankruptcy for Athens, GA residents should help you understand the basics of Chapter 7 and Chapter 13. However, assistance from a legal professional is critical to ensuring you emerge on solid financial footing. To learn how our Georgia bankruptcy law firm can help with your case, please contact Morgan & Morgan, Attorneys at Law, P.C. We can schedule a free consultation at our offices in Athens, GA.

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