Even before the coronavirus pandemic, many people lived on the knife’s edge, financially speaking. About two-thirds of Georgia families did not have the cash to pay a $400 emergency expense. Relief provisions in the 2020 CARES Act have kept a lid on coronavirus bankruptcies so far. Unfortunately, most of these protections expire at the end of the year, making it an excellent time to learn how to qualify for bankruptcy Chapter 13.

Chapter 13 is designed for people who experienced a temporary financial dislocation, like a COVID-19 job furlough, and fell behind on bills. Chapter 13 gives these families up to five years to gradually erase home mortgage, auto loan, and other secured debt delinquency. Furthermore, Chapter 13 discharges many unsecured debts, such as credit cards and medical bills.

Most people qualify for Chapter 13 bankruptcy, especially if they have an experienced Georgia bankruptcy lawyer in their corner. An attorney does more than file forms and represent you in court if things go sideways. A lawyer  also helps your family get the most out of its fresh start by helping you rebuild your credit score and taking advantage of some favorable bankruptcy loopholes.

Benefits of Bankruptcy

We have already mentioned the protected repayment period and unsecured debt discharge. Additionally, bankruptcy’s Automatic Stay prohibits all forms of creditor adverse action, such as:

• Foreclosure
• Repossession
• Eviction
• Wage garnishment and
• Collection lawsuits

Occasionally, some restrictions apply. For example, if the debtor has filed bankruptcy within the last six months, in Georgia or another state, the Automatic Stay might have only limited applicability.

Bankruptcy also protects your family’s most important assets, such as a car, house, and retirement account, from creditor seizure. These protections are unavailable anywhere else, especially since the Supreme Court recently watered down the Fair Debt Collection Practices Act.

Both the Automatic Stay and asset exemption are essential to the debtor’s fresh start. Without both these things, families must go back behind the starting line.

Formal Qualifications

Chapter 13 includes some debt ceilings. These debtors cannot have more than $1.3 million in secured debt and $420,000 in unsecured debt. These numbers seem very high, and they are. However, they include both current and past-due obligations. So, if your family recently bought a mansion, even if you are currently on the payments, Chapter 13 bankruptcy eligibility might be an issue.

Furthermore, all bankruptcy debtors must complete a pre-filing credit counselling course. This brief and inexpensive course is usually available online. Debtors must also complete a debt management course before the judge discharges their unsecured debts. Once again, this brief and inexpensive course is usually available online. Alternatively, some debtors attend free seminars that bankruptcy courts usually sponsor.

In the unlikely event the debtor does not qualify for Chapter 13, other options, such as Chapter 7 or Chapter 11, are normally available.

Georgia Bankruptcy Attorneys and Informal Qualifications

There are also some preliminary and subsequent informal qualifications. These informal qualifications usually involve the income and expense information in Schedules I and J. These qualifications also vary in different jurisdictions.

Unlike Chapter 7, which offers an almost immediate discharge, Chapter 13 debtors must remit a monthly debt consolidation payment to the trustee (person who oversees the bankruptcy for the judge). Therefore, Chapter 13 debtors must have sufficient disposable income to make this payment.

Frequently, to meet this informal qualification, a Georgia bankruptcy lawyer works backwards. Experienced attorneys can normally estimate the plan payment amount. So, a lawyer starts with this amount then works out the math. Do not try this at home. Only an experienced attorney should tackle this issue.

As for the subsequent informal qualification, debtors must timely make this payment every month, come hell or high water. A lot can happen in sixty months. Financial circumstances almost always change for better or worse.  When these changes happen, a Georgia bankruptcy lawyer could file a motion to modify the payment amount. That motion could lower the payment amount to make it more affordable or raise it and allow the family to perhaps emerge from bankruptcy earlier.

Contact a Reliable Georgia Bankruptcy Attorney Today

There are formal and informal Chapter 13 qualifications. For a free consultation with an experienced Georgia bankruptcy lawyer, contact Morgan & Morgan, Attorneys at Law, P.C. at (706) 843-2905. Virtual, after-hours, and home visits 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.