Chapter 7 bankruptcy provides relief for individuals overwhelmed by debt, but it’s essential to know what obligations it covers. You might be asking: What debts are discharged in Chapter 7 bankruptcy in Georgia?

In Georgia, Chapter 7 bankruptcy discharges most unsecured debts, including credit card balances, medical bills, and personal loans. It can also eliminate secured debts if you surrender the collateral, such as a car or home. However, certain debts, like child support and student loans, are not dischargeable.

With decades of experience helping clients achieve financial freedom through Chapter 7 bankruptcy, I’ve guided countless individuals in Georgia toward a fresh start. Let’s break down the debts eligible for discharge and those that may remain after filing.

 

 

Understanding Dischargeable Debts Under Chapter 7 Bankruptcy

In Chapter 7 bankruptcy, many unsecured debts can be eliminated. These debts are not tied to collateral and include:

• Credit Card Debt: Outstanding balances on credit cards, as long as they weren’t obtained through fraudulent means, are usually dischargeable.
• Medical Bills: Medical expenses make up a significant portion of the debt discharged in bankruptcy cases.
• Personal Loans: Loans that are unsecured and not backed by assets, such as furniture or vehicles, can be discharged.
• Utility Bills: Past-due utility payments like electricity, water, and gas bills may also be included.
• Deficiency Balances: If collateral is repossessed or surrendered, the remaining balance (such as on a car loan) can be eliminated.

These discharges offer significant relief to individuals burdened by unsecured financial obligations.

Debts That Are Not Dischargeable

Certain debts are considered “nondischargeable” under bankruptcy law. These include:

• Domestic Support Obligations (DSOs): Child support and alimony payments are protected and must continue despite bankruptcy.
• Student Loans: Generally, student loans cannot be discharged unless the filer meets the stringent “undue hardship” standard, which requires demonstrating:
  • Good faith efforts to repay the loan.
  • A long-term inability to repay due to circumstances beyond their control.
  • That repayment would result in living below the poverty line.
• Recent Tax Debts: Income taxes assessed within the past three years or taxes for which no return was filed typically remain the debtor’s responsibility.
• Debts from Fraud: Debts incurred through fraudulent actions, such as misrepresentation on credit applications, are nondischargeable.
• Debts from Criminal Acts: Financial obligations from illegal activities, including DUI-related damages, cannot be discharged.

Understanding these exceptions helps set realistic expectations for those filing for Chapter 7 bankruptcy.

 

Georgia-Specific Considerations in Chapter 7 Bankruptcy

Means Test and Eligibility

To qualify for Chapter 7 bankruptcy, Georgia residents must pass the means test, which compares their income to the state median for a household of the same size. If your income is below the median, you’re eligible. If not, further calculations determine whether you can proceed.

Exemptions and Asset Retention

Georgia law allows filers to protect certain assets through state-specific exemptions. Common exemptions include:

• Homestead Exemption: Up to $21,500 of equity in your primary residence.
• Vehicle Exemption: Up to $5,000 in vehicle equity.
• Personal Property Exemption: Up to $5,000 in household goods, appliances, and clothing.

Exemptions ensure that you can keep essential assets while discharging eligible debts.

 

The Role of a Bankruptcy Trustee

The bankruptcy trustee plays a crucial role in reviewing your case. They:

1. Assess your financial situation and verify your eligibility.
2. Liquidate non-exempt assets (if any) to repay creditors.
3. Oversee the discharge process to ensure compliance with bankruptcy laws.

 

 

The Chapter 7 Bankruptcy Process

Understanding the Chapter 7 process can help reduce anxiety and prepare you for what lies ahead:

1. Filing the Petition: You submit detailed financial information to the court, including debts, assets, and income.
2. Automatic Stay: Filing triggers an automatic stay, stopping creditor harassment, wage garnishments, and lawsuits.
3. Meeting of Creditors (341 Meeting): You meet with the trustee and creditors to answer questions about your financial situation.
4. Discharge: Eligible debts are officially eliminated, usually within 4-6 months after filing.

 

Handling Aggressive Debt Buyers

Debt buyers sometimes attempt to collect discharged debts, despite legal protections. If this happens:

• Contact Your Attorney: A bankruptcy lawyer can intervene and stop illegal collection efforts.
• File a Complaint: Report violations to the Consumer Financial Protection Bureau (CFPB) or your local attorney general’s office.

 

Differences Between Chapter 7 and Chapter 13 Bankruptcy

While Chapter 7 discharges debts quickly by liquidating non-exempt assets, Chapter 13 allows you to reorganize debts and repay them over 3-5 years. For those with substantial income or non-dischargeable debts, Chapter 13 might be a better option.

 

Rebuilding Credit After Chapter 7

Filing for bankruptcy significantly impacts your credit score. However, you can begin rebuilding it by:

• Applying for a secured credit card.
• Consistently paying bills on time.
• Reviewing credit reports for inaccuracies.

 

Seek Legal Counsel from a Qualified Chapter 7 Bankruptcy Lawyer

Chapter 7 bankruptcy discharges most unsecured debt. For a free consultation with an experienced bankruptcy lawyer in Georgia, contact Morgan & Morgan, Attorneys at Law, P.C. at (706) 548-7070. We routinely handle matters in Clarke County and nearby jurisdictions.