If your finances have gone awry, and you are looking for solutions, you may have considered filing for relief through bankruptcy. Chapter 7 bankruptcy is one form of bankruptcy relief that is available to people in the state of Georgia. Before filing for bankruptcy relief, you should consider whether you qualify, your alternatives, and other specific necessary information.

When filing for Chapter 7 bankruptcy in Georgia, you must meet specific income requirements. In this article, let’s discuss how much debt you must have and the income requirements for filing for Chapter 7 bankruptcy.

What Is Chapter 7 Bankruptcy? 

Often people refer to Chapter 7 bankruptcy as “liquidation” bankruptcy. It got this name because whatever assets or properties not covered by exemptions are surrendered to and sold by the trustee. The trustee then takes the money from the sale of assets and pays your creditors.

Before deciding to file for Chapter 7 bankruptcy, you should speak with an experienced bankruptcy attorney to determine whether you qualify to file for Chapter 7 bankruptcy relief. The lawyer can help you understand which items you have that meet exemption qualifications. With the help of a qualified lawyer, you can exit your Chapter 7 case and be free of most, if not all, of your outstanding debt.

How Does Chapter 7 Bankruptcy Work in Georgia? 

Filing bankruptcy in Georgia is similar to filing bankruptcy in any of the other states. Bankruptcy is a federal debt relief tool rather than a state debt relief tool. Bankruptcy works by unraveling the contracts you have made with your creditors. This unraveling equates to a fresh start for those who file for bankruptcy protection.

While Federal law dictates how bankruptcy works, Georgia’s laws also affect the process. Georgia’s bankruptcy statutes determine what property can be kept after you file for bankruptcy.

Chapter 7 Bankruptcy Versus Chapter 13 Bankruptcy 

The two forms of bankruptcy that most people file are Chapter 7 and Chapter 13 bankruptcy. Filers need to understand the difference between the two before determining which form of bankruptcy is best for their situation. Chapter 7 bankruptcy typically takes a few months to complete, and you don’t have to set up repayment plans with your creditors.

Someone with only the essential property necessary for living and working often finds that Chapter 7 bankruptcy is appropriate for them. However, people with more than the necessary assets might lose them, especially if they have luxury items such as recreational vehicles, collectibles, or vacation homes. Individuals could also lose their home or automobile if they are behind on their payments or have too much equity in their house or car.

Unlike Chapter 7 filers, those who file for relief under Chapter 13 bankruptcy must repay their creditors at least some of what they owe them. The repayment plan is a three- or five-year plan. With Chapter 13, filers keep all of their property and can often save their residence from foreclosure or their automobile from repossession. Debts that can’t be discharged in bankruptcy can often be forcibly placed into a repayment plan.

How to Qualify for Bankruptcy in Georgia

Initial requirements must be met if you’ve never filed for bankruptcy before. However, if you’ve filed before, you must ensure that enough time has passed to allow you to file again. Waiting periods between bankruptcy filings vary and are based on which chapter you previously filed as well as the chapter you plan to file at this point. You must also meet specific qualifications for the chapter you intend to file.

Qualifying for Chapter 7

When deciding whether to file for Chapter 7 bankruptcy, you may wonder how much debt you must have to qualify. With this type of bankruptcy filing, your amount of debt isn’t as important as your household income. You must demonstrate that your debt is too much for you to handle with the income you have.

If you wish to qualify to file Chapter 7, your gross household income must be less than the median income for a family of the same size family within your state. To determine your family’s gross income for this filing, add everyone’s gross income for the previous six months and multiply that by two. Compare that number with the income charts located on the US Trustee website; the information should be found under Means Testing.

If you discover that you make too much money to qualify for Chapter 7, there is a second part of the means test you can take. The second part involves subtracting expenses from your gross household income. If there isn’t enough money left to pay into Chapter 13, then Chapter 7 is your option.

If you qualify for Chapter 7 bankruptcy by passing the Means Test, you can eliminate most of your unsecured debts. Unsecured debts that can potentially be discharged include personal loans, medical bills, credit card debts, old utility bills, most personal judgments, and some old income tax debts. Unsecured debts are those that aren’t secured by collateral.

Secured debts are handled differently in Chapter 7 bankruptcy. For example, if you want to get rid of secured debts such as mortgages or car loans, you must surrender that asset to your creditor. Your creditor must accept that asset as full payment of the remaining amount you owe.

In addition to the income limits for filing Chapter 7 bankruptcy in Georgia, filers must meet other specific qualifications. Those qualifications include the following:

• You can’t have a previous Chapter 7 filing within the last eight years.
• You can’t have a prior Chapter 13 filing within the previous six years.
• If you have a previous bankruptcy filing attempt that was dismissed, you must wait 181 days before attempting to file another bankruptcy case.
• You must complete the required credit counseling course within 180 days before filing for bankruptcy.
• The case can be dismissed if the court thinks you are trying to defraud creditors or avoid paying them.

Chapter 7 Bankruptcy Income Limits in Georgia

Median income levels used for the Means Test get adjusted at times based on Census Bureau and IRS data. For cases that were filed on or following April 1, 2022, the Georgia median income is as follows:

Number of People in the Household	Annual Income
1	$56,008
2	$71, 464
3	$81,241
4	$95,959
5	$105,859
6	$115,759
7	$125,659
8	$135,559
9	$145,459

 

If your household has more than nine members, you add $9,000 for each additional member. Always double-check the US Trustee website to ensure you have accurate median income numbers for use with the Means Test.

Georgia Bankruptcy Exemptions and What They Mean for You

Bankruptcy exemptions are used to protect the equity you have in your property when you file a bankruptcy case. Property that isn’t exempt from bankruptcy can be sold in a Chapter 7 liquidation. If you opted for a Chapter 13 case, non-exempt equity can make the bankruptcy plan payment higher.

Most people are especially interested in protecting their homes. There are specific homestead exemptions in Georgia. Often, the exemptions are broken down by age and marital status. The following represents the current homestead exemptions in Georgia:

• A single person under age 65: $21,500
• A single person aged 65 or older: $21,500
• A married person under age 65: $43,000
• A married person aged 65 or older: $43,000

When you take the homestead exemption in Georgia, $5,000 of unused homestead exemption can be applied to any other property you own. It’s essential that you review additional bankruptcy exemptions in Georgia and select the exemptions that will be best suited to protecting your assets. Federal bankruptcy exemptions aren’t allowed to be used in Georgia bankruptcy cases.

Chapter 7 Bankruptcy Debtor Education Courses and Credit Counseling 

People who file for bankruptcy protection under Chapter 7 bankruptcy must complete two bankruptcy courses to receive a discharge. One of these courses is a required credit counseling course before filing for bankruptcy. The other is a debtor education course after you have filed your bankruptcy case.

You can find a list of the companies that offer the approved courses in Georgia on the United States Trustees website. The courses can be found online. There is a small fee for the approved courses.

Filing for Chapter 7 Bankruptcy in Georgia

If you choose to file Chapter 7 bankruptcy, you usually file in the district where you currently live or where you have lived for 180 days before you file. There is more to filing than completing paperwork and filing it. This is another reason to consult a qualified attorney before filing a Chapter 7 bankruptcy case in Georgia,

Consult A Qualified Georgia Bankruptcy Attorney Before Filing

Bankruptcy isn’t a process you want to undertake on your own. Instead, you should have a lawyer helping you who has experience with bankruptcy law. In Georgia, you want a qualified bankruptcy attorney who understands the income requirements, Means Test, and Georgia bankruptcy exemptions. If you are on the brink of bankruptcy, contact the lawyers at Morgan & Morgan to learn your options and how they can help you with your bankruptcy filing.

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