When debt has become overwhelming and you dread picking up calls from creditors, it is wise to consider your options for discharging debt through bankruptcy. There are two types of filings for individuals and married couples, including Chapter 7 and Chapter 13. While they are different, both cases allow you to eliminate debt if you qualify. Because advance planning is crucial to your success, you should keep in mind how to prepare for bankruptcy in Georgia and the steps to take before filing.

Your preparations should actually start months prior to initiating a Chapter 7 or Chapter 13 case. There are legal requirements under US bankruptcy laws, and your case could be negatively impacted if you do not comply. Plus, you will need to make important decisions about your financial future once you realize the strict eligibility rules. The benefits of bankruptcy are considerable, so you need to put yourself in the best position to take advantage of them.

 

Another step to take before filing for Chapter 7 or Chapter 13 is to retain experienced legal counsel for assistance with preparing documents and going to court. Your Georgia bankruptcy attorney will get started with important tasks, and some general information will help you understand what to expect.

 

Summary of Bankruptcy Laws

Chapter 7 and Chapter 13 allow you to wipe out qualifying debt, and they each include rules that attempt to pay back creditors. These cases are intended to eliminate unsecured debt, in which you did not pledge assets as security for the loan. Examples of unsecured debt are credit cards, lines of credit, personal loans, and medical debt. In addition, you can take advantage of the automatic stay in bankruptcy with both types of proceedings. Creditors are prohibited from suing you, garnishing wages, and foreclosing on your home.

 

With Chapter 7 bankruptcy, there are two important points to note:

 

1. These cases involve a straight discharge of qualifying debt if you qualify under the strict rules described below.
2. Chapter 7 functions to satisfy debt to creditors by liquidation of your assets. The bankruptcy trustee has the power to sell real estate and personal property to pay back creditors.

 

With Chapter 13, you can wipe out qualifying debt through debt reorganization. This process aims to pay creditors back via a debt repayment plan, which combines all debts and reduces them. You make monthly payments for 3 to 5 years under the debt repayment plan, at which point your case is over and you are debt-free. With Chapter 13 bankruptcy, there is no liquidation since you satisfy debt through your plan.

 

Eligibility Rules for Chapter 7 and Chapter 13

Among the first factors to consider when preparing for bankruptcy in Georgia is whether you qualify for Chapter 7, Chapter 13, or both. The rules to qualify are very strict for Chapter 7, because the implications for creditors are so harsh. These companies stand to lose significant amounts, so the bankruptcy rules want to ensure only those debtors who truly need solutions will be eligible. There are two tests to qualify for Chapter 7, and they are based upon income:

 

1. If your earnings fall below the state median income level for Georgia for a household of your size, you automatically qualify. 
2. Alternatively, you need to pass the Means Test if your pay is above the state median. This assessment reviews your income after accounting for certain monthly expenses.

 

With Chapter 13, there is one simple criteria for eligibility. You must have a job, which is the source of income to pay the monthly amount under your debt repayment plan. Keep in mind that, if you qualify for both types of bankruptcy, you might opt for Chapter 13. When you have significant assets to protect, you will not lose them through liquidation as you would with Chapter 7.

 

Steps Before Filing for Bankruptcy

Some of your preparations for a Chapter 7 or Chapter 13 case are required by law, while others are highly recommended to ensure a smooth process. For each type of case, you must complete a credit counseling course. The purpose is to learn more about how credit works, ways you incur debt, and how debt can get out of control. The course will also include basic information about Chapter 7 and Chapter 13, and whether you should consider other options besides bankruptcy.

 

As you get ready to file for bankruptcy, there are some steps you can take that will start your case off on the right foot.

 

• Gather all documents related to your income, from your job and other sources.
• Organize all paperwork representing your significant assets, including all real estate, vehicles, and personal property.
• Collect statements and invoices showing your debts.
• Put together all information related to your monthly expenses, such as utilities, cell phone, food, mortgage or rent, transportation, insurance, and all other costs.

 

Starting the Case and Bankruptcy Proceedings

Once you have completed all prerequisites and the time is right to initiate proceedings, you will file your bankruptcy petition with the US Bankruptcy Court for the Middle District of Georgia. In it, you must designate whether you are submitting your case for Chapter 7 and Chapter 13. You will need to include certain documents along with your bankruptcy petition, and this paperwork is attached as schedules. Some of the proceedings are similar for a Chapter 7 or Chapter 13 case, so you can expect the following steps in your case.

 

• After you file your petition, the automatic stay in bankruptcy goes into effect.
• Creditors that you list on your bankruptcy petition are notified about your case.
• The court schedules the meeting of creditors, which is necessary for both Chapter 7 and Chapter 13.
• You complete all requirements for your case and obtain the final bankruptcy discharge order.

 

With a Chapter 7 case, there are stages of the proceedings in which the bankruptcy trustee will address the issue of liquidation. Only nonexempt assets can be sold, and the trustee will make arrangements for the transaction. In practice, the bankruptcy trustee may opt to not liquidate assets if the process is too time-consuming or when selling would not bring a significant profit.

 

In Chapter 13, the additional stage of the case involves development and confirmation of your debt repayment agreement. Creditors need assurances that you will be able to stay current on the plan and that you are paying as much as you can toward your debt.

 

Answers to FAQs About Bankruptcy in Georgia

For additional help with preparing for bankruptcy, you can review some of the common questions people ask about Chapter 7 and Chapter 13.

 

• Can a creditor request that the automatic stay be lifted? Yes, the lender who holds your mortgage could file a motion with the court, asking for an exception to the automatic stay. If granted, the bank could start or continue foreclosure proceedings.
• How can I save my home in bankruptcy? You can avoid the foreclosure process by continuing to pay your mortgage throughout your bankruptcy case. When you file Chapter 13, you can also discharge late fees and arrearages, though you cannot wipe out your mortgage.
• Can I file bankruptcy if I previously went through the process? It is possible to file another case, but there are waiting times to consider. To file another Chapter 7 case, you must wait 8 years after a Chapter 7 case and 6 years after a previous Chapter 13. When you want to file Chapter 13, you must wait 4 or 2 years after a Chapter 7 or Chapter 13 case, respectively.
• How long does bankruptcy stay on my credit report? A Chapter 7 case will be reported as part of your credit history for 10 years, and a Chapter 13 case will remain for 7 years.

 

Tips for Bankruptcy

While properly preparing for bankruptcy in Georgia is one of the most important steps to take before filing, there are some additional recommendations to keep in mind.

 

• Avoid incurring any additional debt or opening new lines of credit in the months prior to filing your Chapter 7 or Chapter 13 case.
• Always be completely truthful and honest with the information you include on your bankruptcy petition. Do not omit any details that could affect your eligibility.
• Never hide assets to avoid having them sold through liquidation, and do not engage in any transactions that could be construed as fraudulent. An example might be giving gifts or selling an asset for far less than fair market value.
• Once your case concludes, continue to make payments for your mortgage and monthly bills on time and in full. Over time, these efforts will boost your credit score and help you secure new financial opportunities in the future.
• Always apply the lessons you learned in your credit counseling courses, especially about incurring new debt. 

 

As an important tip, you should consult with a Georgia bankruptcy attorney as early in the process as possible. Legal help with the preparations sets the right foundation for your case and ensures there are no delays with your case. Plus, your attorney will be at your side for the creditors’ meeting to assist with all essential tasks.

 

Set Up a Consultation with a Georgia Bankruptcy Lawyer

When you know how to prepare for bankruptcy and steps to take before filing, you support the efforts of your attorney in terms of ensuring an efficient process. You can also feel confident knowing that you made informed decisions about your future. At Morgan & Morgan, Attorneys at Law, P.C., our team is prepared to assist at all stages, so please contact us to schedule a no-cost consultation. A skilled Georgia bankruptcy lawyer can meet with you at our offices in Athens, GA.