If you’ve come to the point where you are considering filing for bankruptcy in Georgia, you probably have some questions about which chapter you qualify for and what those determining factors are. The basic difference between Chapter 7 and Chapter 13 bankruptcy is that a Chapter 13 petition means you have a greater amount of unsecured debt and that you can repay a portion of this because you are over the median income for Georgia. But how much debt do you have to have to qualify? Let’s explore.

Chapter 13 petitions are sometimes known as wage earners’ plans. They’re sort of a “bankruptcy for when you still have money.” The reason that they exist is that the state and lenders want to be able to recover as much of their money as possible, and if everyone could file for bankruptcy to erase their debts, even if they had plenty of disposable income, it would make it too easy.

So, when filing a Chapter 13—in Georgia or any other state of the US—the borrower will propose an agreement to repay all or part of their debts over a certain amount of time. The installment plan usually stretches from three to five years, depending on the total amount of debt and the portion of the borrower’s income that is expendable. If the debtor has an income level that is under the Georgia state median, then they will plan to repay as much as they can over three years. If they have an income level that is higher than average, then they will make debt payments for five years. No Chapter 13 petitions last for longer than this. During these three to five years, the debtor only pays their bankruptcy agreement payments, and those go to the lenders. No other debt collector can come after the borrower during this time.

 

How to Qualify for a Chapter 13 Bankruptcy in Georgia

Any citizen can qualify for a Chapter 13 petition, as long as they have less than $394,725 in unsecured debt (e.g., personal loans, car loans, credit card debt) and less than $1,184,200 in secured debt (e.g., mortgage, student loans, tax debt). It doesn’t matter if you are self-employed, if you run an unincorporated business, or if you work for the government or a large company.

These amounts are often adjusted due to changes in the consumer price index, so working with a tax lawyer to make sure that your debts still qualify you at the time of petitioning is always a good idea.

In addition to these debt amounts, a borrower must also have engaged in a credit counseling course within the last six months before filing. This course must have come from an approved credit counseling agency, but can have been done in an individual or group setting. If there was an emergency situation, however, or if the US trustee or bankruptcy administrator determines that there were not enough approved agencies available so that the borrower had appropriate access to a course, this requirement could be waived. If the borrower creates a debt management plan during the course, they are required to share it with the court during bankruptcy proceedings.

 

Disqualifications for Chapter 13 Bankruptcy

If you have previously filed for a Chapter 13 in Georgia, but during the past six months you had the petition dismissed because you willfully did not make your court appearances or comply with court orders, you will not be able to apply again, no matter if your debt amounts qualify you. You are also disqualified if your case was voluntarily dismissed because the creditors looked to the bankruptcy court to try and seize your property.

 

Other Information Needed to File a Chapter 13 Petition in Georgia

Before filing for bankruptcy, you need a few more pieces of information besides your debt amounts and types. You should collect your schedules of assets and liabilities, your current income and required bills and expenses, all the contracts and leases that you are currently required to pay, and a professional statement of your financial affairs. You’ll also need pay stubs from your employers from the last two months, and documentation that you completed the required credit counseling course (or an exception form from the state of Georgia).

You will need to have a statement showing your monthly net income, as well as a list of anything that might increase your income or your expenses in the time period after you file. If you have interest that is accruing in federal or state education or tuition accounts, that needs to be documented as well. You’ll also need your most recent tax return documents, as well as returns for any years that weren’t filed when you began your case.

Once all this is compiled, the debtor must list out:

 

• All creditors, how much is owed to each, and the nature of the claims
• The amount, frequency, and source of all income
• All currently owned property
• Detailed descriptions of all monthly living expenses, including food, clothing, educational expenses, housing, utilities, transportation costs, medical costs, taxes, etc.

 

If you are married and filing Chapter 13 individually, you still need to gather this information for your spouse, as their income and expenses affect yours as well. This helps the court to get an accurate picture of the petitioner’s complete financial situation. For example, if Spouse A has racked up a significant amount of credit card debt and is going to file Chapter 13 individually, but Spouse B makes a six-figure income with hardly any expenses, then together they should be able to pay off that debt without filing bankruptcy and the court will want to know this.

 

Fees to File a Chapter 13 Bankruptcy Petition

Ironically, it costs money to file for bankruptcy. In Georgia, the courts charge a filing fee of $235 and an administrative fee of $75. In almost all cases, these fees are due at the time of filing, but certain courts will make exceptions and allow some petitioners to pay these fees in installments. However, the highest installment amount is four, and the last payment cannot be made longer than four months after filing the petition. If there are extenuating circumstances that come up after those 120 days, the court can extend the last installment payment to 180 days, or six months, after filing. Joint bankruptcy petitions (in which two spouses file together) are only charged one set of fees. If these fees are not paid, Chapter 13 cases are dismissed.

 

What Happens Once Chapter 13 Is Filed in Georgia?

Once a Chapter 13 petition goes to the Georgia Department of Revenue, an automatic stay goes into place which stops creditors from coming after the borrower. However, this does not apply to student loans or certain categories of tax debt, and the automatic stay might only apply for a short amount of time. When it is in effect, though, creditors cannot pursue lawsuits, garnish wages, or even call the borrower to demand money. The bankruptcy court is responsible for notifying all creditors once a petition has been filed; the borrower does not have to do this extra work.

This automatic stay also applies to co-signers or joint owners of credit accounts. So, if two spouses were both named on a credit card but only Spouse A files for Chapter 13, the credit card company cannot call or contact Spouse B for payment. This situation does not apply to tax debt, however, which the state can continue to pursue.

Automatic stays also help petitioners save their homes from foreclosure. The homeowner is safe in their home during the bankruptcy period and has a reasonable amount of time (agreed upon in the bankruptcy hearings) to bring their mortgage account up to date. In the situation that the homeowner falls back on their mortgage payments again, though, the home would go into foreclosure again. If the foreclosure sale can be completed under Georgia state law before the bankruptcy petition is filed, however, the borrower could still lose their home.

The next step is that the debtor attends a meeting with all the creditors. This happens between three and seven weeks after filing the petition. In the discussion, the debtor answers questions about their financial situation, under oath. Bankruptcy judges are not permitted to attend these meetings so that they can remain impartial in their decisions. Both the debtor and creditor typically come to an agreement to make a payment arrangement and resolve any problems. It is smart for the debtor to ensure that their petition and proposed plan are complete and accurate, which is easily done with the help of a trustee.

After this meeting, in which the creditors, the debtor, and the bankruptcy trustee discuss the plan, the Chapter 13 plan is confirmed and a hearing is undertaken with the courts. Then they file a repayment plan within 14 days and the court approves it.

 

Final Thoughts

Choosing to file a Chapter 13 bankruptcy is not a decision to be made lightly. The professional lawyers in Athens, GA at Morgan and Morgan Law Firm are experienced in helping people see their situation as a whole and making wise decisions with regard to their past and future finances.

Don’t go this path alone. Let us take care of all the hard work and legalities so that you can concentrate on getting back on your financial feet and on with your life.