Filing for protection under bankruptcy laws isn’t an easy decision. Besides deciding whether or not to file, you must also consider whether to file for Chapter 13 protections or Chapter 7. That’s merely the beginning of your journey with the bankruptcy court system.

When you’ve decided to file, in the back of your mind, you may wonder, “What happens when this is over? If I file Chapter 13 bankruptcy in Georgia, what happens at the end of the process?” However, you often push the question to the back of your mind because the road to the end of the process isn’t as simple as filing, and you’re done.

Let’s look at Chapter 13 bankruptcy, what happens when you file, and what happens at the end of your filing.

What Is Chapter 13 Bankruptcy?

If you decide to file for bankruptcy protection, you must understand what Chapter 13 bankruptcy is. Chapter 13 is one of two kinds of bankruptcy protection that individuals typically file for when experiencing financial difficulties. The ultimate goal when you file bankruptcy is to start your financial life fresh.

Chapter 13 bankruptcy is often considered a bankruptcy plan for the working man. People with regular, stable incomes can file a petition for Chapter 13 and create a plan that repays part or all of their outstanding debt. The petitioner pays their plan off over three to five years.

Your income determines how long you will need to pay on your bankruptcy plan. The judge will typically approve a three-year repayment plan if your monthly income is less than the state’s average income for Chapter 13 filings. If your monthly income exceeds the average allowable income, then your plan will be set for a five-year term.

What Are the Advantages of Chapter 13 in Georgia?

You might be wondering what the advantage of filing Chapter 13 is if you’re required to pay your creditors after you’ve filed the petition. The most significant advantage of Chapter 13 bankruptcy is avoiding liquidating your assets. The most important asset Chapter 13 can help you save from liquidation is your home.

Chapter 13 bankruptcy allows you to work with creditors to reschedule your payment plans and extend them over the life of your bankruptcy. Because bankruptcy stops those calls, you won’t have creditors calling you looking for the money you owe them. Think of a Chapter 13 bankruptcy plan as a kind of consolidation loan because you pay payments to the trustee, and then the trustee pays the creditors according to the bankruptcy plan.

What Happens When You Finish Paying Toward Chapter 13 Bankruptcy in Georgia?

When you filed for Chapter 13 bankruptcy in Georgia, the judge determined if you should repay your debt over three or five years. Once that time is finished, and you’ve completed your repayment plan, you will get a discharge order from the court. A discharge order wipes out the remaining balances of the debts you placed in bankruptcy. However, you must understand that not all obligations are created equal when it comes to bankruptcy.

Which Debts Must Be Paid in Chapter 13 Bankruptcy?

To determine if your debts are eligible for inclusion in your bankruptcy proceeding, you must understand the difference between secured and unsecured debt. Secured debts are those debts that are guaranteed by some collateral, like your car or your house. Unsecured debts are those that aren’t attached to any property. If you don’t pay them, the creditors can’t come after your home, car, or other physical property.

When you consider unsecured debts, it’s important to note that they are divided into two sub-categories. Unsecured debts can be either priority or nonpriority debts. Priority unsecured debts take precedence over nonpriority debts, and you can’t discharge them through bankruptcy. Nonpriority unsecured debts are usually dischargeable through bankruptcy and are only paid if money is left after paying your other debts.

Let’s look closer at these types of debts.

• Secured debts: you must pay debts secured with collateral or choose to surrender the property you used as collateral. The two biggest secured debts most people have are their homes and their cars. A long-term debt like your mortgage doesn’t need to be paid completely through bankruptcy. You will need to catch up on any past-due payments through the plan. If you surrender the property you used as collateral, that debt will convert to a nonpriority unsecured debt.
• Priority unsecured debts: you can’t discharge these debts in your bankruptcy filing. That means you must pay them fully through bankruptcy or outside of it.
• Nonpriority unsecured debts: Many debts discharged in Chapter 13 bankruptcy are nonpriority unsecured debts. Medical bills, utility bills, personal loans, and credit cards are examples of nonpriority unsecured debts. Student loans are nonpriority unsecured debts that are not dischargeable. The only way to have student loans discharged is to prove in a separate proceeding that paying the debt will cause you unnecessary hardship. You won’t have to fully repay them in your bankruptcy plan, but you will still be responsible for paying them.

Debts Commonly Discharged in Georgia Chapter 13 Bankruptcy

When you finish your Chapter 13 repayment plan, most of your nonpriority unsecured debt balances will be discharged. The exception to that rule is your student loan balances. Here are some of the nonpriority unsecured debts that are commonly discharged through Chapter 13 bankruptcy.

1. Credit card debts: many people who file for bankruptcy have credit card debt that has gotten out of control. Your credit card debts will be discharged if you have any balances left over after completing your payment plan. Credit cards are nonpriority unsecured debts.
2. Medical bills: insurance companies don’t always pay the total amount of your medical care. When you have medical debt because the insurance company didn’t pay the total amount, you can include the medical bills in your Chapter 13 bankruptcy filing, and they can be discharged.
3. Personal loans with no collateral attached to them: these loans are similar to credit card debt. These loans have no property securing them—a payday loan is an example—and they can be discharged at the end of the Chapter 13 case.
4. Older tax obligations: most tax debts are priority debts that can’t be discharged. However, some tax debts can be discharged as long as it’s determined that you didn’t commit fraud and filed your taxes on time. Those debts are typically older income tax balances.
5. Debts related to negligence or breach of contract: this category refers to debts incurred through a judgment against you. If you willfully caused injury to someone, those judgments aren’t dischargeable. If you did something accidentally that caused personal injury or property damage, or if you failed to honor a contract, the debts can typically be discharged through Chapter 13.

Debts Eligible for Discharge in Chapter 13 But Not in Chapter 7

One of the advantages to filing Chapter 13 bankruptcy instead of Chapter 7 is the variety of debts that can be discharged in a Chapter 13 case. Here are some of the debts that can be discharged through Chapter 13 that aren’t eligible for discharge in Chapter 7.

• Willful, malicious property damage
• Debts incurred to pay a tax obligation
• Some debts incurred during divorce or property settlement proceedings
• Homeowners’ dues incurred after petitioning for bankruptcy (in some cases, if you surrender your house)
• Government fines, penalties, or forfeitures unless they are due to a criminal sentencing
• Some unsuccessful bankruptcy case debts—certain debts not discharged in a previous bankruptcy case—the exception is if the judge declared them non-dischargeable
• A crammed-down or stripped lien—in some cases, your property is worth less than you owe, and you are allowed to reduce the loan to equal the property value—the reduced portion then becomes nonpriority unsecured debt
• Unusual debts: debts caused by a wrongful act committed against a bank or credit union; court fees for a prisoner who has filed a petition (as simple as a document or as complex as a lawsuit), debts incurred because of securities law violations

When Will You Get Your Discharge in Georgia?

You must pay a specific portion of your debts through the Chapter 13 repayment plan before any debts are discharged. Your repayment plan will be based on the kind of debts you have, what your property is worth, how much you make, and what your overall expenses are. The court will determine your repayment amount.

Your bankruptcy trustee will handle paying the debts based on priority. Some debts must be paid fully, while others can be fully discharged. Many debtors have trouble completing their bankruptcy repayment plan. That’s why you need to have a Georgia bankruptcy attorney helping you through the process.

Your Chapter 13 plan will end after no more than five years. Once you’ve completed your payments, the trustee will notify you of your discharge. You will also be notified if you overpaid, which can occasionally happen.

Talk to Our Qualified Chapter 13 Bankruptcy Attorney in Georgia

Chapter 13 bankruptcy is designed to help you regain a more secure financial footing. You must take the opportunity to make changes to your financial behavior so you don’t find yourself back in bankruptcy court at a later date. If you have questions about Chapter 13 bankruptcy in Georgia and how it can affect your financial future, contact Morgan & Morgan, Attorneys at Law, P.C.

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