Your credit score goes down when you file Chapter 7 bankruptcy. However, unless the debtor had excellent credit, the effect is not that significant. In most bankruptcy debtors do not have excellent credit. If they did, they probably would not file Chapter 7 in the first place. So what happens after you file Chapter 7 bankruptcy in Athens, GA? Your assets are protected and you can start building your credit and your financial future.

The reason for a slight credit score decline, instead of a dramatic one, is simple. When people file Chapter 7, they acknowledge the problem and do something about it. On the other hand, entries like foreclosure, collection referrals, and repossession indicate that the debtor simply gave up. On a related note, for active accounts, like past-due student loans, the person’s credit score declines every month with every missed payment. Bankruptcy ends that downward spiral.

So much for the bad things that happen when you file Chapter 7 bankruptcy. As outlined below, there are a number of good things that happen. And, a Georgia bankruptcy lawyer helps your family make the most of bankruptcy’s fresh start. As a result, after a few years pass, many people forget that they filed at all.

Asset Exemption

Chapter 7 bankruptcy protects your key assets. Without this protection, creditors could go to court, seize these assets, and liquidate them to satisfy your debts. The Georgia bankruptcy exemptions include:

• Home equity
• Motor vehicle
• Personal property
• Current wages
• Retirement accounts
• Government benefits, including Social Security benefits

A Georgia bankruptcy attorney knows how to maximize these exemptions. The home equity exemption is a good example. Georgia law protects a limited dollar amount of equity. Assigning proper value to the home in Schedule A avoids future conflicts with the trustee (person who oversees the bankruptcy for the judge) over this issue.

Automatic Stay in Georgia

Furthermore, Section 362 of the Bankruptcy Code usually takes effect as soon as debtors file their voluntary Chapter 7 petitions. The Automatic Stay prohibits all creditor adverse actions, including:

• Repossession
• Wage garnishment
• Foreclosure
• Harassing phone calls
• Collection lawsuits

The Automatic Stay usually remains in effect until the bankruptcy judge closes the case. Moneylenders can only bypass the stay if the judge grants special permission. And, a Georgia bankruptcy lawyer knows how to block these requests.

341 Meeting and Georgia Bankruptcy Attorneys

About six weeks after you file your Chapter 7 petition, there is a meeting with the bankruptcy trustee. In most cases, this meeting is rather simple, and a Georgia bankruptcy lawyer can simplify it even further.

Generally, the trustee reviews certain documents ahead of the meeting. These documents typically include the debtor’s last few years of tax returns and last few pay stubs. Other documents, such as bank statements, might be required as well.

At the meeting itself, a Chapter 7 trustee verifies the debtor’s identity, usually by eyeballing a state-issued photo ID and Social Security card. If you do not have these things, let your Georgia bankruptcy attorney know in advance. Other alternatives are available.

Finally, your Georgia bankruptcy lawyer asks some yes/no financial questions. You know the questions and the answers in advance.

Debt Discharge in Athens, GA

Most people file Chapter 7 bankruptcy because it quickly eliminates unsecured debts, such as credit cards, medical bills, and payday loans. “Discharge” means the judge eliminates the legal obligation to pay the debt. However, the unsecured debt itself remains. For example, if the discharged debt includes medical bills, the doctors can refuse to provide further services until the debt is paid or otherwise satisfied.

A Georgia bankruptcy attorney often steps in at times like this. A lawyer negotiates with creditors to reduce or eliminate the collateral consequences of unpaid debt.

Some unsecured debts are only dischargeable in limited situations in a Chapter 7. Back taxes are a good example. These unsecured debts are dischargeable if the taxes are at least three years overdue and the debtor meets some other qualifications. If discharge is not an option, other alternatives, such as Chapter 13 repayment bankruptcy, are usually available.

Long-Term Improvements

It’s impossible to guarantee that filing for Chapter 7 bankruptcy will yield long-term improvements in your overall financial situation. That’s because it is still your responsibility to take advantage of filing for bankruptcy by making wise financial decisions in the future.

That said, it’s very common for people who file for bankruptcy to find that in the long run, doing so improves their credit score and helps them avoid additional financial woes. There are many reasons this is the case. 

One is the fact that when you file for bankruptcy, you’re usually required to complete courses on responsible credit usage and general personal finance. When you take these courses, you’ll learn how to manage your finances in a way that guards against future difficulties.

Filing for bankruptcy may also require you to exercise more discipline when spending your money. At first, this might be a difficult adjustment, but over time, you will learn that the comfort you enjoy from being financially stable is preferable to the short-term pleasure that spending money may provide you with.

This isn’t meant to suggest that someone who files for Chapter 7 bankruptcy must be financially irresponsible. There are a number of potential reasons why even those who are careful with their finances can find themselves in circumstances that make it necessary to file for bankruptcy. That said, every single person could always benefit from learning more about how to save and spend prudently. It’s simply the case that many who file for bankruptcy end up being forced to learn valuable lessons that may elude others.

Personal Benefits of Chapter 7 in Athens, GA

If you are in a position to consider filing for Chapter 7 bankruptcy, you may be experiencing a relatively significant degree of stress for entirely understandable reasons. It can be difficult to relax and focus on improving your financial situation when you are also dealing with nearly constant contact with lenders and creditors.

Again, the Automatic Stay prevents most creditors and lenders from contacting you in an effort to satisfy debts. This can be very relieving. The peace of mind that you might experience after filing for bankruptcy can itself have a wide range of positive impacts on your life.

For example, research indicates that money struggles represent the most common cause of stress in marriages and romantic relationships in general. While the idea of addressing your struggles by filing for bankruptcy may seem overwhelming now, you will likely find that taking this step when it’s a good idea to do so can actually help you and your spouse or partner resolve your disputes. Instead of focusing on your money troubles in a negative or unproductive manner, you can instead take this opportunity to work towards a more comfortable future together.

Additionally, not having to worry about creditors and lenders calling you all the time will make your day-to-day life much easier. Just remember, the personal benefits you may experience as a result of filing for bankruptcy will only last if you prioritize being financially responsible moving forward.

This highlights one of the numerous reasons you should strongly consider hiring a qualified bankruptcy attorney when preparing to file for Chapter 7. Lawyers who consistently work with clients in financial situations similar to your own tend to be quite familiar with the various ways such clients can avoid future financial struggles. Thus, while also guiding you through the process of filing for bankruptcy, an attorney can potentially help you by offering valuable advice too. They will simply know what their past clients have done to ensure that filing for bankruptcy ultimately had a positive impact on their financial habits.

Preventing Future Financial Issues

It’s entirely possible that filing for Chapter 7 bankruptcy can help you avoid financial difficulties that might have otherwise arisen as a result of your debts.

For example, perhaps a creditor is attempting to satisfy a debt which you are unable to pay. Depending on the circumstances, if you haven’t filed for bankruptcy, they could theoretically repossess your vehicle. This might impact your ability to travel to work. Without your car, you might run the risk of losing your job, or you might have to spend more money on taxis to reach your place of employment on a daily basis.

That’s likely not a circumstance you need to be concerned with if you file for Chapter 7 bankruptcy. Doing so will prevent a creditor from being able to repossess your vehicle. That means you won’t have to worry about losing your job or spending more than you can afford on taxis due to an inability to get yourself to work.

This is just one example. The main point to understand is that, while many consider filing for bankruptcy to be a sign that financial problems will continue to impact their lives in the future, in reality, filing for bankruptcy is often a wise way to avoid financial problems.

Speak to an Astute Georgia Bankruptcy Attorney at the Earliest

Some good things happen after you file Chapter 7 bankruptcy. For a free consultation with an experienced Georgia bankruptcy lawyer, contact Morgan & Morgan, Attorneys at Law, P.C. at (706) 843-2905. Convenient payment plans are available.

 

Originally published October 10, 2020 and updated October 23, 2021.