No one ever wants to have to declare bankruptcy. Unfortunately, though, life hits people hard and when it does, the hits sometimes keep coming. Job loss (especially during the current pandemic), home repairs, car breakdowns, unexpected medical expenses… the list goes on and on and all of a sudden, you’re drowning in debt and you don’t know how you got there! Filing for bankruptcy with the help of a Georgia Bankruptcy Lawyer isn’t something that you need to be ashamed of.

It happens to millions of Americans every year, which is why there are experienced and understanding bankruptcy attorneys who can help. In Georgia, the lawyers at Morgan & Morgan will help you navigate the ins and outs of bankruptcy so that you know from the get-go what you’ll be required to pay back and what debt will be forgiven.

 

Why You Would Need or Want to File a Chapter 13

There are two different types of bankruptcy: Chapter 7 and Chapter 13. Chapter 13 filing has some advantages; however, choosing this option means that there is still a decent portion of your debt that you have to pay back.

A Chapter 13 filing is also called a “wage earner’s plan.” People who still have a job and/or a regular income work with attorneys to develop a plan to pay back part—or sometimes all—of their debt. Instead of having to deal with dozens of creditors breathing down their neck each month, though, and having ridiculous interest rates prevent any progress from being made on the debt, a Chapter 13 bankruptcy in Georgia essentially places a hold on all communication from the creditors and the consumer simply deals with the state.

Then, over three to five years (depending on the consumer’s situation), they agree to pay off a certain amount of their debt each month to the State of Georgia, and the trustee then divvies up the payments to the creditors. If the debtor has a monthly income that is less than the state’s median income level, they will only have to pay back the set fee every month for three years. If, however, they make more than the median amount, their repayment plan will be over five years. There is no situation where a court can require a bankruptcy filer to pay for more than five years, but the court could require someone who technically falls in the three-year situation to pay back debt over a longer period if cause applies.

When people choose to file a Chapter 7 bankruptcy, they are required to completely liquidate their assets. They lose their homes, cars, rental properties, everything! Chapter 13, on the other hand, allows consumers to keep their property during and after the process. For most people, this is most important when they realize that they don’t have to give their home over through foreclosure, and this is worth paying back their debt for years going forward. That being said, all mortgage payments are due according to the regular timeline during the bankruptcy period, and if the homeowner continues to default, then the bank could still seize their home.

People in Georgia often find Chapter 13 filings beneficial because it allows them to restructure their payments of secured debts and stretch them out over time. This can lower the payments and make it easier to actually stay on top of what is owed. Filing a Chapter 13 also gives the consumer’s co-signers some protection while the original borrower tries to pay what they owe.

It can feel a lot less overwhelming to make one singular payment to the bankruptcy trustee (who then disperses payments to the creditors). Having this ability can mean that the debtor can concentrate on getting their finances in better order and getting back into the black, rather than continually sinking under the weight of their debts.

 

Eligibility

Anyone who wants to reap the benefits of getting to keep their home and/or property is eligible to file for a Chapter 13 bankruptcy in Georgia, as long as they have less than $394,725 in unsecured debt (i.e., credit cards, consumer loans) and less than $1,184,200 in secured debt (i.e., mortgages, car payments). Even those who are self-employed or who operate an unincorporated business qualify.

(Check with your local bankruptcy attorney for the most updated figures, as they change periodically according to the consumer price index.) A business itself, such as a corporation or partnership, may not file for a Chapter 13.

You are also not eligible if you willfully failed to attend court or you did not honor your court-sanctioned bankruptcy payments within the last 180 days for a separate case filing. This is also the case if you defaulted on your mortgage payments or payments for other properties and your creditors sought relief to recover said property.

It is a requirement for filing that you attend an approved credit counseling course from a credit counseling agency. This can be done either individually or in a group setting, but it must have been completed within 180 days of the original filing. If there was an emergency, or the US courts determine that there were not sufficient agencies and/or courses available, exceptions can be made but it is not common. Usually during these sessions, the borrower is encouraged or required to create a debt-management plan. If so, that plan must be filed with the court.

 

Chapter 13 Proceedings

In Georgia, the first step to getting your finances back on track and paying off your debt in a less stressful, more straightforward manner is to file a petition with the bankruptcy court. When you file, you must include:

• A list of all your assets.
• A list of all your liabilities.
• Your total current income (including evidence of payment from your employers).
  • If your income is expected to increase or decrease within the next 60 days, this must be stated as well.
• All your monthly expenses.
• Lists of all current contracts and unexpired leases.
• A record of any federal or state qualified education or tuition accounts and the interest being collected on them.
• A current, full, and true statement of your financial state.
• The debt-management plan developed during your credit counseling session(s) and your certificate of completion.

Each year during the three-to-five-year period, the debtor is required to turn in tax returns, including the return that is on file for the year in which the Chapter 13 begins. If there are tax returns for past years that have yet to be completed, those must also be filed during this process.

The required forms also need to have this information in full:

• A complete list of the petitioner’s creditors, nature of the claims, and the full amount.
• The source, amount, and payment schedule for all available income.
• All assets and property owned by the debtor.
• All the debtor’s monthly living expenses, including food, shelter, utilities, clothing, transportation, medical expenses, tax debts, etc.

 

Payment Plan

Once the petition is filed, you have 14 days to file a repayment plan. This plan will be submitted to the courts for approval and will show how much you will pay to the bankruptcy trustee, either every two weeks or each month. This plan will detail three types of payments: priority, secured, and unsecured claims.

Priority claims have to be paid in full—bankruptcy fees, tax debts, student loans, and child support usually qualify. Secured claims, such as your home or other property, must have a plan to pay back at least the value of the collateral. Unsecured debt does not have to be paid in full as long as the debtor agrees to pay any and all “disposable income” over the required three or five years.

In this situation, the creditors must also receive just as much as they would if the debtor liquidated all assets under a Chapter 7 filling.

The judge will decide if this plan is feasible and whether it meets the Georgia Bankruptcy Code standards. This will happen within 45 days of the plan’s submission.

 

Filing Fees

Ironically, it costs money to file for bankruptcy. Georgia courts charge a fee of $235 to file a Chapter 13 bankruptcy, as well as a $75 fee which goes toward miscellaneous administrative tasks. These get paid to the court clerks; however, if circumstances warrant it the court can approve payment plans.

Payments cannot exceed four installments, though, and the final payment must be made no later than 120 days after the original Chapter 13 petition. If cause is shown to be necessary, the court can decide that any installment can be made later, as long as it then doesn’t stretch past 180 days. If a couple is filing together, there is only one filing and administrative fee charged even though the bankruptcy petition is for two people.

If these fees are not paid, the case will be dismissed. Then, the petitioner will not be able to file for bankruptcy again for another 180 days.

 

Call Today For A Free Consultation From An Experienced Georgia Bankruptcy Lawyer at Morgan & Morgan

Filing for a Chapter 13 bankruptcy can actually be a freeing feeling. No longer will all your creditors be calling you at all hours of the day, demanding payment that you just cannot come up with. Instead, you will get to make one simple payment each month and have an end date in sight.

Three to five years is going to pass anyway, and you’ll have to be paying something during this time period—it might as well be one sum and then you can be done. Then you can focus on other things, like your financial future and your family. With a Chapter 13 filing, you’ll also be able to start fresh without having to move out of your beloved home.

Let the experienced Georgia Bankruptcy Lawyers at Morgan & Morgan help you navigate this process. You don’t have to be ashamed or embarrassed, and you can walk out of our offices with your head held high for the choice you’ve made to start again.