The novel coronavirus has affected our lives in many ways, and that includes bankruptcy filings. A number of retailers and other companies have already filed Chapter 11 bankruptcy. Most observers expect a significant uptick in the number of consumer bankruptcies as well. But this effect might be delayed. Most people consider bankruptcy a last resort.

Bankruptcy filings negatively affect credit scores, but for the most part, the effects are positive. As outlined below, bankruptcy stops aggressive creditors dead in their tracks. Bankruptcy also shields key assets and gives families a fresh financial start.

A good Georgia bankruptcy attorney not only helps families maximize these benefits. A lawyer also helps families move forward after they emerge from bankruptcy. Generally, after a few years pass, many former bankruptcy debtors have entirely forgotten their filings.

Creditor Adverse Action Stops

In a string of recent decisions, the United States Supreme Court has diluted some key consumer protections in the Fair Debt Collection Practices Act. As a result, many creditors are more aggressive than ever. 

Vehicle loan delinquency is a good example. Most lenders no longer observe a grace period. Instead, they begin repossession proceedings after only one missed payment. Additionally, most new vehicles have hidden GPS locators which can also disable the vehicle’s ignition. Some lenders disable ignition if the owner is only a few days late.

Technically, these owners can convince a civil judge to halt such aggressive actions. But most judges require considerable evidence of loan fraud or other misconduct. But Section 362 of the Bankruptcy Code generally kicks in as soon as debtors file their voluntary petitions. This provision stops all forms of adverse action, including:

• Repossession,
• Foreclosure,
• Wage garnishment,
• Creditor harassment, and
• Collection lawsuits.

Generally, the Automatic Stay remains in effect until the court issues a discharge order. Moneylenders can only bypass the stay if they obtain special permission from the judge. Your Georgia bankruptcy lawyer can represent you at this hearing.

Your Assets are Protected

Even if a creditor is able to bypass the Automatic Stay, Georgia has some of the broadest bankruptcy exemptions in the country. In a nutshell, creditors cannot seize exempt property to satisfy debts. These exemptions include:

• Homestead: Up to $21,500 of home equity ($43,000 if both owners file bankruptcy) is exempt. Note that there is a difference between equity and fair market value. If the trustee cannot sell the home for enough money to cover the entire equity exemption and enough to substantially benefit the creditors, the seizure is still illegal.
• Motor Vehicle: $5,000 of equity is exempt, and the same rules apply. Most new cars have high values and almost no equity. Most used cars have almost no value and substantial equity.
• Retirement Account: The Supreme Court recently affirmed that 410(k)s, IRAs, and other nest egg accounts are 100 percent exempt, regardless of their value. This exemption usually applies to other long-term savings accounts as well, such as 529 college savings plans.
• Current Wages: 75 percent of due but unpaid wages are exempt. This generous exemption helps families successfully make the transition into bankruptcy.
• Personal Property: There are dollar value limits here as well, but they only apply to an item’s garage sale value. For example, an almost-new TV might fetch pennies on the dollar in a garage sale. This exemption also applies to government benefits, such as Social Security benefits.

The garage sale value rule also applies to homesteads. A home’s as-is cash value, per a home investor, might only be a fraction of its fair market value.

Unsecured Debts are Discharged

“Discharge” ends the legal obligation to repay a debt. A Georgia bankruptcy lawyer must separately negotiate with creditors to take care of things like property or credit liens. Most unsecured debts are dischargeable unless there is evidence of fraud. This list includes:

• Credit card debt,
• Medical bill obligations, and
• Payday loan balances.

The Bankruptcy Code includes a 90-day fraud presumption. Any unsecured debt use within 90 days of filing is presumed fraudulent. That includes things like items charged on a credit card or trips to the doctor. A Georgia bankruptcy lawyer knows how to effectively refute this presumption, so families are not denied their fresh starts.

Conclusion

If you’re struggling with debts and other financial problems, filing bankruptcy will provide you with the opportunity to repay a part of your debts over time. You may also get some debts eliminated entirely. Declaring bankruptcy will certainly affect your credit score negatively, but it will also stop creditors from trying to collect from you. Further, they will not be able to deduct money from your bank account, garnish your wages or acquire your other assets. You can start afresh by working with an experienced bankruptcy attorney, who will protect your rights and help determine the next steps.

Connect with an Experienced Bankruptcy Attorney in Athens, GA

Bankruptcy has many unique benefits for you and your family. For a free consultation with an experienced bankruptcy lawyer in Georgia, contact Morgan & Morgan, Attorneys at Law P.C. at (706) 843-2905. Convenient payment plans are available.

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.