For many distressed debtors, bankruptcy is an absolute last resort after they exhaust all other options. That’s technically true. However, since the Supreme Court recently struck some key consumer protections from the Fair Debt Collection Practices Act, there are not many other options available. Are you wondering, Should I file bankruptcy in Athens, GA?

If you are more than one payment behind on a secured debt, such as a home mortgage, you should consider Chapter 13 bankruptcy. That’s especially true in non-judicial foreclosure states like Georgia. Lenders can carry out foreclosure proceedings without any judicial oversight. They must only file paperwork.

As for unsecured debts, if you owe more than about $5,000, you should consider Chapter 7 bankruptcy. Realistically, amounts larger than that are impossible to pay off. That’s especially true since many creditors no longer offer payment arrangements, due to the aforementioned FDCPA rollbacks.

If all this sounds confusing, an Athens, GA bankruptcy lawyer can go over all your legal options. Bankruptcy petition preparers cannot offer this kind of advice. And DIY filers are completely on their own. Besides, an attorney does more than point you in the right direction. An attorney stands up for you in court.

Bankruptcy Halts Adverse Action

Civil court judges technically have the power to stop creditor adverse actions. But they rarely do so, unless the debtor presents overwhelming evidence of fraud or other misconduct. 

Section 362 of the Bankruptcy Code is different. In most cases, this provision immediately halts adverse action, such as:

• Foreclosure,
• Creditor lawsuits,
• Repossession,
• Harassing phone calls, and
• Wage garnishment.
• Debtors need not prove fraud or anything else to take advantage of the Automatic Stay. 

 

Creditors can only bypass the Stay if the bankruptcy judge grants special permission. And, if the debtor has a strong attorney, such permission is not easy to obtain.

The Automatic Stay halts adverse action, but it does not reverse it. Once repossession and foreclosure occur, they are quite difficult to undo. So, as soon as creditors make these threats, you should probably file bankruptcy.

Bankruptcy Puts You in Control

Serious debt problems are incredibly stressful. Typically, these debtors feel they do not control their own personal finances. And, if creditors threaten repossession and foreclosure, that’s largely true. Bankruptcy reverses this dynamic, and auto loans are a good example.

Most people want to retain their cars, which means they must keep making payments. Therefore, they typically reaffirm these debts. Reaffirmation gives an Athens bankruptcy lawyer the chance to renegotiate payment terms, like the interest rate.

Outside bankruptcy, moneylenders rarely make favorable deals. They hold all the cards. However, if the debtor files bankruptcy, the lender knows the debtor can walk away from the debt. That move leaves the creditor with nothing but a used car that no one probably wants. As a result, the moneylender often makes a favorable deal, so the borrower will keep making payments.

Debtors also control the type of bankruptcy they file. At almost any time, they can convert from Chapter 7 to Chapter 13 or vice versa. In a nutshell, Chapter 7 quickly gives families a fresh financial start and Chapter 13 gives families the time they need to erase debt delinquency.

Bankruptcy Protects Assets

In board games like Monopoly, bankruptcy is the end. Once players declare bankruptcy, they surrender all their property and have no hope of re-entering the game.

Fortunately, the real world is substantially different. Most Georgia bankruptcy debtors keep most of their property. The Peachtree State has some of the most generous bankruptcy exemptions in the country. Examples include:

• Home equity,
• Retirement nest egg accounts,
• Motor vehicles,
• Personal property,
• Government benefits, including Social Security benefits,
• Insurance proceeds,
• Child and spousal support funds, and
• Most of their current wages.

 

Additionally, Georgians can exempt certain other property, such as vacations homes and boats, which are not normally exempt under state law.

Bankruptcy Myths, Debunked

Some people fall prey to a number of misconceptions surrounding the topic of filing for bankruptcy. This can prevent them from understanding the many ways in which filing for bankruptcy can actually be the best financial decision for them to make in the long run.

Bankruptcy myths you should be aware of include the following:

Myth: People will know I filed for bankruptcy

Some people are embarrassed to file for bankruptcy. They don’t want their friends and family to know they are facing difficult financial circumstances that may have resulted from their own errors.

This is an understandable concern. However, it’s not one that should prevent anyone from taking advantage of bankruptcy.

First of all, people who file for bankruptcy are by no means always financially irresponsible. There are many reasons people who otherwise manage their money properly may nevertheless need to file for bankruptcy. People file for bankruptcy due to unexpected job losses, illnesses, and other situations that may have been out of their control.

Additionally, filing for bankruptcy is often a very responsible financial move to make. Regardless, if you’re worried that friends and family will learn that you’ve filed for bankruptcy, you probably don’t need to be. Learning whether or not someone has filed for bankruptcy can be a tedious process. If you want to conceal the fact that you’ve filed for bankruptcy from certain people in your life, odds are very good you will have no trouble successfully doing so.

Myth: Filing for bankruptcy is difficult and time-consuming

Those considering filing for bankruptcy are often facing overwhelming circumstances already. The process of sorting through your debts and determining how you may go about addressing them can be very mentally taxing. You might thus decide you don’t wish to move forward with filing for bankruptcy because you believe the process of doing so will add to your already substantial burdens.

 

The notion that filing for bankruptcy is a difficult process is another myth. Yes, filing for bankruptcy does involve completing paperwork, submitting it, and gathering various forms of documentation, but innovations such as e-filing have made this easier than ever.

 

More importantly, you don’t necessarily need to be the one who handles the majority of tasks that filing for bankruptcy may involve. Again, if you work with a bankruptcy attorney, they can take over many aspects of the process. This will simplify it greatly.

Myth: Married people must file for bankruptcy together

There are many instances in which two spouses filing for bankruptcy jointly is a wise idea. This is the case when both spouses have joint debts. For example, if you and your spouse have a credit card or loan under both of your names, it makes sense for you to file for bankruptcy together.

 

However, you don’t always need to file for bankruptcy jointly when you’re in a marriage. Perhaps two newlyweds have differing financial situations. One may be on stable ground financially, while another may have various past debts they have not repaid. In this instance, they may consider filing for bankruptcy as an individual.

 

It can sometimes be difficult to know whether filing for bankruptcy jointly is the proper decision, or whether you should file for bankruptcy as an individual. This is another matter that a bankruptcy lawyer can advise you on. Discuss your case with an attorney to better understand the pros and cons of your options.

Myth: I don’t qualify for bankruptcy

It is true that courts apply the “means test” to determine whether an applicant qualifies for bankruptcy. That said, many make the mistake of assuming they shouldn’t bother trying to file for bankruptcy because they won’t qualify.

 

This may be partially due to the way changes made to bankruptcy laws in 2005 were misrepresented by creditors and in the media. There’s evidence to suggest some creditors took advantage of these changes by attempting to convince the public that they rendered it difficult for the vast majority of individuals and families to qualify for bankruptcy. Many adopted the belief that only a rare few families and individuals would now be able to file for bankruptcy successfully.

 

This resulted in a prevalent misconception that made many believe attempting to file for bankruptcy wasn’t worth their time. However, it’s actually the case that successful bankruptcy filings have increased since 2005.

 

Still, even if you genuinely qualify for bankruptcy, showing that you do can be a challenge depending on the circumstances. This is yet another reason to enlist the help of a bankruptcy attorney. They can demonstrate to the courts that you meet the necessary criteria. Additionally, if you truly don’t qualify for bankruptcy, an attorney can let you know, preventing you from spending time attempting to take advantage of the bankruptcy system when odds are good you won’t be able to do so.

How Bankruptcy Impacts Your Future

There are several reasons why some debtors are reluctant to file for bankruptcy. One is the fact that they believe doing so will have an adverse impact on their credit.

 

This is an understandable concern. It’s also true that in the immediate aftermath of filing for bankruptcy, your credit score will likely take a hit.

 

However, in the long run, filing for bankruptcy can potentially have a very positive impact on your credit score. Some researchers have found that within a year of bankruptcy ending, people tend to have higher credit scores than they did when they first filed for bankruptcy.

This is because many who file for bankruptcy already have poor credit. By filing for bankruptcy, they no longer have to continue fighting a difficult uphill battle. They can instead focus on rebuilding their credit.

 

Rebuilding Credit After Bankruptcy Is Easier Than You May Think

There are a number of ways you can go about improving your credit after bankruptcy. Many are quite easy and simple. Examples include the following:

Get a credit card or loan and use it strategically

You might assume that filing for bankruptcy will essentially prevent you from qualifying for any credit card or loan approvals for the foreseeable future. That’s not necessarily the case. There are in fact many lenders and credit card companies that are willing to work with those who’ve filed for bankruptcy. An Athens bankruptcy attorney can potentially connect you with them.

By getting a credit card, you can significantly improve your chances of rebuilding your credit fairly rapidly. You simply need to use your credit card properly. This involves only using it to make purchases when you know with absolute certainty that you will be able to pay the balance on time each month. Doing so will slowly (although not as slowly as you may think) but surely give your credit score a boost.

Set aside an emergency budget

It’s not uncommon for a person’s credit to take a hit because they were unprepared for an emergency situation. You can guard against this happening to you by setting aside an emergency fund. If you set aside some money every week, you’ll be better prepared to cover unanticipated expenses that could otherwise put your credit in danger again. In general, it’s also a good idea to establish an overall weekly or monthly budget.

Ask someone to be a co-signer

Although it is certainly possible to qualify for certain credit cards and loans after filing for bankruptcy, if you’re struggling to rebuild your credit as quickly as you would like to, you can also ask someone to co-sign a loan or credit card application.

A co-signer is ideally someone with strong credit. If they agree to co-sign a loan or credit card application, their credit will also be impacted by your failure to make payments.

That means they are taking on a risk as a co-signer. Don’t ask someone to be a co-signer unless you are thoroughly confident you will use your loan or card responsibly and will make all your payments on time. You also can’t get upset if someone decides the risk isn’t one they’re willing to take.

None of this is meant to discourage you from considering this option. Securing a loan or credit card with the help of a co-signer can very much help you rebuild your credit fast. It’s simply important that you understand the implications of this decision to avoid making mistakes that can jeopardize your relationship with someone close to you.

Become an authorized user

This is another option to consider when rebuilding your credit after filing for bankruptcy. It’s an option many turn to when they can’t find someone willing to be a co-signer, or when they don’t feel comfortable asking for someone to co-sign a loan.

Becoming an authorized user often involves obtaining a credit card that’s in your name but is technically tied to someone else’s account. You may be more likely to qualify for such a card because their credit profile will be the one that lenders use to assess your creditworthiness, not yours.

Being an authorized user may also simply involve being permitted to use someone else’s credit card. Just confirm that your payment activity will be reported before going this route. It’s not always the case that authorized user payment activity is reported. If it is, though, this method won’t necessarily improve your credit score as significantly and speedily as others listed here, but as long as you make your payments, it can still be helpful.

These are just a few examples. The main point to understand is that filing for bankruptcy doesn’t need to thoroughly damage your credit for years to come. If you apply tips like these, you can rebuild your credit relatively quickly.

Conclusion

The bottom line is that bankruptcy is designed to give your family a fresh financial start. That cannot occur if creditors harass you, moneylenders control your finances, or you lose important assets. So, bankruptcy in general addresses all these things. A good lawyer makes sure your legal and financial rights are protected.

Seek Solid Legal Advice from an Experienced Bankruptcy Attorneys in Athens, GA

Contrary to the common notion, bankruptcy does not mean desperation. In fact, it is a second chance that will help ease your financial burden and rebuild your credit according to bankruptcy laws. In some cases, it can help minimize or even eliminate your debts, protect your assets, and keep collectors and their phone calls away.

If debt causes stress and there is no other way out, you should file bankruptcy. For a free consultation with an experienced bankruptcy lawyer in Athens, contact Morgan & Morgan, Attorneys at Law P.C. at (706)-843-2905. We routinely handle matters in Clarke County and nearby jurisdictions.