Many people who never considered bankruptcy before now see Chapter 7 as a legitimate option. That’s largely because the Supreme Court has eroded some key protections in the Fair Debt Collection Practices Act. Therefore, creditors who were relatively patient are now very aggressive.

Chapter 7 bankruptcy eliminates an unsecured debt, like credit cards and medical bills, in only a few months. At the same time, it shields key assets, such as your house and personal property, from creditor adverse action. That adverse action includes things like a seizure to pay debts, foreclosure, and repossession.

However, bankruptcy is a lot more than filing forms. Trustees (people who oversee bankruptcies for judges) routinely challenge certain aspects of Chapter 7, like the discharge of some debts or some property exemptions. A solid Georgia bankruptcy lawyer stands up for your legal and financial rights in these situations.

Who Should File Chapter 7?

Overspending and financial mismanagement causes some people to file bankruptcy. Generally, however, most people file bankruptcy because of a financial storm of life, such as:

• Medical Bills: Two-thirds of all consumer bankruptcies are directly or indirectly related to medical bills. Sometimes the bills themselves force people into bankruptcy. Other times, excessive lost work time is the underlying issue.
• Unemployment/Business Downturn: Most people live from paycheck to paycheck. They have little or no savings. As a result, the loss of even one or two checks often triggers a snowball effect which wreaks havoc on family finances.
• Credit Card Debt: A few people use credit cards to buy luxury goods. But most people use them to pay routine expenses. Credit card interest rates often exceed 20 percent. As a result, the unpaid balance typically grows every month, even if the card was not used.

Frequently, these financial storms overlap. For example, a job loss or economic downturn usually forces people to use their credit cards more often than they like.

Qualifying for Chapter 7

Before looking at the nuts and bolts of filing Chapter 7, it’s important to look at some eligibility requirements. Most people qualify to file Chapter 7, but there are some things to look at.

The means test is probably the biggest Chapter 7 qualification. Debtors are eligible to file if their annual income is lower than the average annual income for that family size in that geographic area. As of May 1, 2020, that amount is $87,317 for a family of four in Georgia. 

If your income is slightly over that amount, a Georgia bankruptcy lawyer can file some additional paperwork to lower your income for bankruptcy purposes. If your income is significantly over this threshold, other options are available.

There are also some requirements in terms of prior Chapter 7 cases. The Automatic Stay might not fully apply if the debtor has a prior bankruptcy dismissal in the last six months. And, discharge might be unavailable if the debtor has received a bankruptcy discharge in the last five years. However, these requirements usually do not prevent people from filing.

Finally, there are a few informal qualifications. For example, if the debtor’s monthly income exceeds the debtor’s monthly expenses, once credit card and other unsecured debt payments are factored in, the trustee might ask some pointed questions about the need to file Chapter 7.

Launching a Chapter 7 Bankruptcy

When they decide to file bankruptcy, some people turn to bankruptcy petition preparers, or they try to handle these matters themselves. These approaches are usually mistakes. An efficient Georgia bankruptcy lawyer does more than start your case on the right foot. An attorney gives you solid legal advice throughout the process.

After they complete a required credit counselling course, debtors file their voluntary petitions and supporting schedules. Generally, bankruptcy is voluntary. Debtors can file when they want and withdraw their filings when they want. The schedules contain detailed information about the petitioner’s assets and debts. A false statement on the schedules, even if the statement is not malicious, could be considered bankruptcy fraud.

Once debtors file their paperwork, they usually need to prepare for the trustee’s meeting. Prior to this meeting, the trustee typically demands certain documents, such as the last few months of bank statements and the last few years of tax returns. At the meeting, debtors usually need to show their Social Security cards and their drivers’ licenses or other official picture IDs. Failure to cooperate with the trustee could result in an involuntary dismissal.

Debt discharge usually comes about nine months later. This discharge gives the family a fresh financial start free from the most unsecured debts.

Conclusion 

Those struggling with debt can consider filing bankruptcy to gain relief and get a fresh start in their lives. Filing Chapter 7 bankruptcy, in particular, can eliminate unsecured debt in a matter of months. It also protects your key assets from creditors’ adverse action. The above pointers will give you a fair idea of the process involved in filing this type of bankruptcy. Working with a skilled Georgia bankruptcy lawyer will allow you to understand your legal and financial rights better.

Reach Out to Experienced Bankruptcy Attorneys in Athen, GA

Chapter 7 bankruptcy gives honest yet unfortunate debtors a fresh start. For a free consultation with an experienced bankruptcy lawyer in Georgia, contact Morgan & Morgan, Attorneys at Law P.C. at (706) 843-2905. After-hours visits are available.