Filing for Chapter 7 bankruptcy should provide the filer with a new beginning. However, if certain mistakes are made along the way, filers may find that some of their debt survives the bankruptcy. In such cases, the filer will remain responsible for the debt and will not be provided with the fresh start they counted on. One of the most important things for first-time Georgia bankruptcy filers to remember is to include all their debts in their bankruptcy petition.

A Chapter 7 bankruptcy is known as a liquidation bankruptcy because the filer’s assets are sold, or liquidated, to cover their debts. The proceeds from the sale are distributed among creditors by the bankruptcy trustee. Any remaining debt that is not paid off by the sale is discharged. However, the filer is not automatically entitled to the discharged of excess liability. To successfully obtain a discharge, the filer must follow the requirements of a bankruptcy.

If a filer fails to comply with the bankruptcy requirements, a creditor can object to the discharge of a debt and the filer may remain responsible for the obligation. Filers are responsible for listing all of their debts. In a way, this is common sense because a court cannot discharge a debt that it does not know about.

Even if a debt is not listed, however, it may still be discharged if the filer’s bankruptcy is considered a “no asset” bankruptcy. A no-asset bankruptcy is one in which the filer does not have any assets which the trustee can sell. Importantly, this does not necessarily mean that the filer has no assets to their name, only that the assets owned do not exceed the exemptions.

In a no-asset bankruptcy, unsecured debts can still be discharged even if they are not listed, because there were no assets available to sell, and therefore no cash available to pay the unsecured creditor. However, if a secured debt is left out, the debt will not be discharged, and the creditor may be able to collect on the loan after the bankruptcy is complete. The specifics of how unscheduled assets are handled is determined on a case-by-case basis.

If you are considering filing for bankruptcy, contact the knowledgeable attorneys at the Georgia bankruptcy law firm, Morgan & Morgan, P.C. To learn more, call (706) 752-7089 to schedule a free consultation today.

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.