A wage-earner plan bankruptcy could be the best way to reduce stress during a very stressful time. Largely due to the coronavirus pandemic, almost 75 percent of Americans say that finances are the number one cause of stress in their lives. In many cases, this stress is so bad that it causes symptoms like crippling fear, extreme depression, and other things that make it difficult or impossible to function at work or home. Are you asking, What is Chapter 13 Bankruptcy? The answer could be your way out of debt.

If past-due secured debts, like mortgage delinquency, is causing this stress, Chapter 13 could be a way out. This federal debt relief program stops creditor harassment, gives people time to catch up on payments, and discharges many unsecured debts.

These benefits are available, but only a good Athens bankruptcy lawyer is able to claim them for you. In addition to these basic benefits, a lawyer can unlock some advanced benefits which, in many cases, can save your family thousands of dollars. Moreover, only an Athens bankruptcy lawyer gives you solid advice throughout the process and stands up for you when you need help the most.

What Is Chapter 13 Bankruptcy Asset Protection?

When Monopoly players file bankruptcy, they lose all the plastic houses and hotels they own, not to mention all their property squares. Many people assume the same thing happens in a real-life bankruptcy. But a Chapter 13 bankruptcy is much different. Monopoly’s rules do not include the Automatic Stay or property exemption rules.

The Automatic Stay, which is in Section 362 of the Bankruptcy Code, immediately stops adverse creditor actions like:

• Eviction,
• Lien placement,
• Foreclosure,
• Wage garnishment, and
• Repossession.

Some people ask civil judges to stop these actions. Indeed, judges can technically enter temporary injunctions which halt them. However, civil judges usually only intervene in extreme circumstances. The Automatic Stay, on the other hand, is, well, automatic. Ask and ye shall receive.

Additionally, Georgia’s property exemptions (property protections) are very broad. The trustee, who is the person who oversees the bankruptcy for the judge, can liquidate all nonexempt assets to pay the petitioner’s debts, even in a Chapter 13. However, most people do not have nonexempt assets. The protected list includes:

• House,
• Motor vehicle,
• Retirement account,
• Personal property,
• Government benefits, and
• Cash in a checking account.

A number of unwritten exemptions are available as well. An Athens bankruptcy lawyer can use these loopholes to protect property which would otherwise be nonexempt. More on that below.

The Protected Repayment Period in Georgia

Bankruptcy’s Automatic Stay usually remains in full effect until the judge closes the case. In a Chapter 13, the case usually remains open for five years. So, debtors have up to sixty months to take care of things like past-due mortgage payments without worrying about adverse action like foreclosure or creditor harassment.

Here’s how it works. When you file Chapter 13, most of your disposable income goes to a monthly debt consolidation payment. The trustee then spreads this money among delinquent mortgage payments and other allowed claims. As long as the trustee approves the plan, creditors cannot successfully object to it. They cannot pressure you to pay more money or pay it faster.

Although the exact amount varies, largely based on the amount of allowed claims, the monthly debt consolidation payment is often about the size of a luxury car payment. If the payment amount is a problem, an Athens bankruptcy lawyer offers alternatives. These options include conversion to Chapter 7, a modified payment amount, or a hardship discharge.

Athens Bankruptcy Lawyers Serving Clarke County Georgia

As mentioned, the written property exemptions are only a starting point. Bankruptcy’s financial shield is much larger, at least in many cases.

The best interests of creditors rule is a good example. Assume Mike owns a fifth wheel. The written exemptions do not protect it. So, the trustee makes plans to liquidate it.

The trustee believes a buyer will pay $1,000 for the fifth wheel. The trustee also estimates that the fifth wheel needs about $500 in repairs. Furthermore, sales costs, mostly storage costs, will be about another $500.

Seizing and selling Mike’s fifth wheel would not be in the creditors’ best financial interest. At best, they would only get a few dollars apiece. Most likely, they would lose money on the deal. So, although the fifth wheel is not legally exempt, the trustee cannot touch it.

Lien stripping is another example. Now assume Mike has a $200,000 mortgage and a $20,000 HELOC (Home Equity Line of Credit) on a $200,000 home. The home’s value is not high enough to secure both liens. So, an Athens bankruptcy lawyer might convince a judge that the HELOC is a dischargeable unsecured debt.

Chapter 13 is a complex process that gives you a fresh start. For a free consultation with an experienced bankruptcy lawyer in Athens, contact Morgan & Morgan, Attorneys at Law, P.C. We routinely handle matters in Clarke County and nearby jurisdictions.