Fighting against unmanageable debt leads to incredible stress, leaving you overwhelmed, discouraged, and worried. Many people in this difficult position find that filing for bankruptcy provides a fresh start and a path to financial stability.

Often, clients express regret about not filing sooner. Had they taken action faster, they’re problems would have been resolved much more easily. In this article, we explore the main advantages of filing for bankruptcy in Georgia, shedding light on how it can help you regain control of your financial situation.

The benefits of Filing Bankruptcy include the following:

• Automatic Stay Protection
• Saving Your House in Chapter 7 and Chapter 13
• Saving Your Car in Chapter 7 and Chapter 13
• Eliminating Credit Card Debt
• Eliminating Personal Loans
• Managing Non-Dischargeable Debts
• Improving Your Credit Score

With this many benefits, it’s clear why bankruptcy protection is sought by millions of Americans each year. However, bankruptcy does entail a few downsides. It temporarily restricts credit access, remains on your credit report for ten years, and may force the sale of some assets. Though these are negatives, many households find that they are vastly outweighed by the benefits of filing.

Automatic Stay Protection in Athens

One of the immediate benefits of filing for bankruptcy is the automatic stay. As soon as you file, most creditors face a prohibition against continuing collections activities, including collection calls, lawsuits, wage garnishments, and foreclosures. This stay provides immediate relief and gives you the opportunity to address your financial situation without constant harassment from creditors.

For example, imagine you’re facing foreclosure on your home. Once you file for bankruptcy, the automatic stay halts the foreclosure process, allowing you time to explore your options and work towards a resolution. This stay can provide crucial breathing room to assess your financial circumstances and decide the best course of action.

But some debts have exemptions from the automatic stay, including child support, alimony, and most taxes. Consult a bankruptcy attorney for more details.

Saving Your House in Chapter 7 and Chapter 13

Many people fear losing their homes if they file for bankruptcy. However, it’s important to understand that Georgia bankruptcy laws provide the homestead exemption, which allows you to retain your home unless you have more than the allowable equity.

For instance, suppose your home equity falls within the exemption limits of $21,500 for single homeowners and $43,000 for married homeowners. In that case, you can keep your house while discharging other debts through Chapter 7 bankruptcy, eliminating unsecured debts, such as credit cards and personal loans, while maintaining homeownership.

In Chapter 13 bankruptcy, also known as reorganization bankruptcy, you create a repayment plan to catch up on missed mortgage payments, saving your home by allowing you to make affordable payments over a period of three to five years. At the conclusion of the process, you have caught up on arrearage, and the home remains yours, provided you continue making future payments.

Saving Your Car in Chapter 7 and Chapter 13

Similar to homes, many people worry about losing their vehicles by filing for bankruptcy. However, both Chapter 7- and Chapter 13 bankruptcy offer options to help you retain ownership of your car.

In Chapter 7 bankruptcy, you can use exemptions to protect the equity in your car. Georgia permits a motor vehicle exemption of up to $5,000 per debtor or $10,000 for joint debtors.

For example, let’s say you own a car with equity within the exemption limits. In that case, you can keep your vehicle while discharging other debts through Chapter 7 bankruptcy.

In Chapter 13 bankruptcy, you can include your car payments in the repayment plan. This allows you to catch up on missed payments and keep your car while reorganizing your finances.

It is important to consult with an experienced bankruptcy attorney to determine the best approach based on your specific circumstances and to fully understand the exemptions and options available to save your vehicle.

Eliminating Credit Card Debt in Athens

One of the major benefits of filing bankruptcy is the discharge of unsecured debts, including credit cards. Revolving account balances can accumulate quickly due to high-interest rates, penalties, and fees. Bankruptcy provides an opportunity to eliminate these burdensome debts and start fresh.

Eliminating Personal Loans in Athens

Similar to credit card debt, personal loans can become a significant burden when financial circumstances change for the worse. These loans often carry high-interest rates and can take years to repay. Bankruptcy allows you to eliminate personal loan debt, giving you a chance to regain control of your financial situation.

For instance, if you have personal loans that have become unmanageable and are hindering your ability to cover essential expenses, filing for bankruptcy can discharge those debts, providing you with a clean slate and the opportunity to rebuild your financial future.

Managing Non-Dischargeable Debts in Athens

While bankruptcy can discharge many types of debt, certain obligations survive, such as child support, alimony, and most tax debts. However, bankruptcy can help manage these non-dischargeable debts through reorganization and repayment plans.

For example, Chapter 13 bankruptcy allows you to include non-dischargeable debts in the repayment plan, helping you manage these financial obligations while simultaneously addressing other debts.

Consulting with a bankruptcy attorney is essential to understand how bankruptcy can help manage non-dischargeable debts based on your specific circumstances and the relevant bankruptcy laws in Georgia.

Improving Your Credit Score in Athens

Although filing bankruptcy can initially tank your credit score, the plunge is usually temporary. With responsible financial management and time, your credit score can improve significantly once the bankruptcy process ends. Many clients find that once the credit bureaus record the conclusion of the bankruptcy, their scores rise higher than they were before filing.

By eliminating overwhelming debt and starting fresh, you have the opportunity to rebuild your credit history. Establishing new credit accounts, making timely payments, and demonstrating responsible financial behavior can contribute to the gradual improvement of your credit score.

Keeping Personal Property in a Georgia Bankruptcy

Filing for bankruptcy in Georgia does not mean that you lose all your personal property. State and federal bankruptcy laws provide exemptions that allow individuals to retain certain essential assets during the bankruptcy process. These exemptions protect necessities from being liquidated to repay creditors.

In Georgia, the state exemptions cover various types of personal property, including household goods, clothing, furniture, and tools of the trade. The exemptions also extend to specific amounts of equity in your home, car, and retirement accounts.

For example, if you own a car and its equity falls within the exemption limits, you can keep your vehicle. The motor vehicle exemption in Georgia typically protects up to $5,000 of equity per debtor or $10,000 for joint debtors.

Similarly, household goods and furnishings, such as appliances, furniture, and clothing, are generally protected up to certain amounts specified by the state exemptions. These exemptions allow you to retain the necessary items for maintaining your daily life.

It’s essential to consult with a bankruptcy attorney to understand the specific exemptions applicable to your situation and ensure that you maximize the protection available for your personal property. An experienced attorney guides you through the process and helps you navigate the complexities of bankruptcy law in Georgia.

Remember, the purpose of bankruptcy is to provide a fresh start and relieve the burden of overwhelming debt, not to strip individuals of their essential assets, but rather to offer a pathway to financial stability while protecting their basic needs and belongings.

Georgia’s Bankruptcy Wildcard Exemptions

In addition to the specific exemptions for certain assets, Georgia bankruptcy laws provide a wildcard exemption that debtors can use to protect personal property not covered by other exemptions. The wildcard exemption allows you to safeguard additional assets of your choice, providing flexibility and preserving certain belongings that hold value to you.

Georgia’s wildcard exemption is particularly valuable as it allows you to protect assets that might not fall within the predefined categories of exemptions. The wildcard exemption amount varies depending on the bankruptcy chapter you file under and can change over time.

For instance, in Chapter 7 bankruptcy, the wildcard exemption in Georgia can be used to protect up to $1,200 in any type of property, in addition to the exemptions available for specific assets. This can include cash, bank accounts, or other personal property.

In Chapter 13 bankruptcy, the wildcard exemption may offer greater protection, enabling you to retain valuable assets while adhering to a repayment plan.

Understanding and utilizing the wildcard exemption can significantly benefit your bankruptcy case, allowing you to retain additional assets that hold sentimental or practical value to you.

Bankruptcy Success Example

Carrying unmanageable debts without filing for bankruptcy can have long-term detrimental effects, such as losing homes and cars and suffering from very poor credit. Imagine a debtor, a working professional, who finds herself drowning in credit card debt because of an unexpected medical condition that resulted in large expenses and the loss of her job. She struggles to make minimum payments, but the debt continues to compound. Naturally, her stress and anxiety increase, affecting her mental- and emotional well-being.

If she decides against filing for bankruptcy and continues to suffer financial hardship, she may face the following difficulties:

Ever Increasing Debt

Without a structured plan to address the debts, they continue to grow, resulting in a never-ending debt spiral.

Low Credit Score

Late payments, high credit card balances, and potential defaults demolish credit scores, making it challenging to secure favorable terms for future credit or loans and locking the debtor out of some markets.

Limited Financial Options

With high debt-to-income ratios and damaged credit, a debtor’s ability to access credit, buy a house, or secure prime interest rates is severely limited.

Stress and Strain

Carrying unmanageable debts can lead to prolonged stress, affecting the debtor’s mental and emotional state, complicating relationships, and diminishing quality of life.

On the other hand, filing for bankruptcy can provide the debtor with immediate relief, the opportunity to eliminate or restructure her debts, and a chance to rebuild her financial life. Bankruptcy can offer her a fresh start and the ability to regain control of her financial future, mitigating the long-term consequences of carrying unmanageable debts without intervention.

Filing for bankruptcy in Georgia provides numerous benefits, including protection against creditor actions, saving your home and car, eliminating credit card debt and personal loans, making it easier to manage non-dischargeable debts, and improving credit scores.

 

Reach Out to A Lawyer Today in Athens

Never let misconceptions and stigma about bankruptcy discourage you from accessing the relief provided by bankruptcy. If you’re struggling with overwhelming debt, it’s crucial to seek guidance from experienced professionals. Contact Morgan & Morgan bankruptcy attorneys in Athens, GA to discuss your financial situation and explore the best course of action. Take the first step towards regaining financial freedom. Contact Morgan & Morgan today.

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