This federal debt relief program gets rid of most unsecured debt, which is good news for many area families asking, What is chapter 7 bankruptcy? The average Georgia household has almost $9,000 in credit card debt. That’s one of the highest credit card debt loads in the country. Most experts say that your credit card debt should not exceed 10 percent of your income. So, if your family earns less than $90,000 a year, you probably have more credit card debt that you can pay off.

People in this situation basically have two options. They can tread water as long as possible and hope things get better. Or, they can reach out to an Athens bankruptcy lawyer, eliminate credit card debt, and take control of their financial problems. An attorney gives you solid advice about your bankruptcy options. Then, an Athens bankruptcy lawyer takes care of all the complicated paperwork. Finally, a lawyer stands up for you when your legal or financial rights are threatened.

Qualifying for Georgia Chapter 7

The formal qualifications for Chapter 7 bankruptcy are fairly easy to meet. All debtors must take a credit counselling class before they file and a debt management class after they file. These brief classes are usually available online and typically very inexpensive.

The means test is a larger hurdle. Debtors cannot file Chapter 7 if their annual income is above the average amount for that geographic area. In Georgia, as of November 1, 2020, this amount is $91,161 for a family of four.

In the unlikely event you do not qualify, an Athens bankruptcy lawyer can offer other options. These alternatives include Chapter 13 bankruptcy and non-bankruptcy debt negotiation. Chapter 13 discharges unsecured debts and also gives families a chance to erase secured debt delinquency. Debt negotiation includes many of the advantages of debt consolidation and avoids the adverse credit score effects.

What Is Chapter 7 Bankruptcy Code Section 362?

Section 362 of the Bankruptcy Code is one of the biggest benefits of bankruptcy. Typically, as soon as debtors file their voluntary petitions, the Automatic Stay halts things like:

• Repossession,
• Wage garnishment,
• Foreclosure,
• Utility shutoff, and

It is almost impossible for unsecured creditors to get around the Automatic Stay. And, there are harsh penalties for violating this Bankruptcy Code provision.

The Automatic Stay is not the only protective provision in a Chapter 7 bankruptcy. The law also protects most of your assets from creditor seizure. So, even if creditors somehow get around the Automatic Stay, they cannot touch:

• Houses,
• Cars,
• Government benefits, such as Social Security benefits,
• Retirement accounts, and
• Personal property.

Some exemptions are item-based. Retirement accounts are normally 100 percent exempt, regardless of their financial value. Other exemptions are asset-based. They protect a certain amount of equity in a house, car, or other asset.

The 341 Meeting with the Help of Your Athens Bankruptcy Lawyers

About six weeks after debtors file their voluntary petitions, there is a meeting with the trustee (person who oversees the bankruptcy for the judge). If these meeting goes well, the trustee recommends immediate discharge. If this meeting goes badly, discharge could be delayed, limited, or denied. So, assertive representation from an Athens bankruptcy lawyer is critical.

The trustee’s two biggest jobs are verifying the debtor’s identity and uncovering possible bankruptcy fraud. So, prior to the meeting, most trustees request a number of documents, including a Social Security card, government-issued photo ID, recent bank statements, and recent tax returns.

Most trustees also ask a series of related questions. An Athens bankruptcy lawyer typically goes over these yes/no questions with you before the meeting.

How Debt Discharge Works in GA Chapter 7

“Discharge” means the judge eliminates the legal obligation to repay unsecured debts. Dischargeable unsecured debts usually include medical bills, payday loans, signature loans, and credit cards.

A bankruptcy judge can only discharge a debt. A judge cannot erase the debt itself or reverse the collateral consequences of debt. So, if the IRS files a lien against Tony because he has back taxes before he filed bankruptcy, that lien remains, even if the judge discharges the tax debt.

Speaking of back taxes, these obligations are priority unsecured debts. They are only dischargeable in certain situations. Other priority unsecured debts include past-due child support and student loans.

Chapter 7 filings usually remain on your credit history for ten years. However, the effects usually fade within a few months, if former debtors work to improve their credit scores. For example, to demonstrate responsible credit use, many former debtors charge items on credit cards and pay the balance in full every month.

Chapter 7 gives your family a fresh financial start. For a free consultation with an experienced Athens bankruptcy lawyer, contact Morgan & Morgan, Attorneys at Law, P.C. Convenient payment plans are available.