The different kinds of bankruptcy are for different kinds of debtors. But most debtors have at least one thing in common. They live close to financial disaster. Most Georgians do not have the cash to pay a $400 emergency expense. So, a temporary income disruption, perhaps due to a sudden car accident or short-term job loss, usually triggers a catastrophe.

Chapter 7 almost immediately gives these families a fresh financial start. Chapter 13 enables debtors to gradually repay their obligations over time. Keep reading to learn more about the kind of bankruptcy that’s right for you.

The bankruptcy process is intimidating. A Georgia bankruptcy lawyer makes the process much easier. An attorney evaluates your case and lays out your options in terms of Chapter 7 or Chapter 13. That way, you do not go down the wrong path. Furthermore, an attorney takes care of the complex paperwork and stands up for your legal and financial rights.

Similarities Between Chapter 7 and Chapter 13 in GA

The Automatic Stay applies in both Chapter 7 and Chapter 13 cases. Section 362 of the Bankruptcy Code immediately halts most forms of creditor adverse actions, such as:

• Foreclosure,
• Wage garnishment,
• Eviction,
• Utility shutoff,
• Repossession, and
• Creditor lawsuits.

Furthermore, the Automatic Stay prevents creditors from launching any of these adverse actions. Creditors who violate Section 362 of the Bankruptcy Code, even if the violation is unintentional, face harsh consequences.

Bankruptcy also protects your family’s most important assets. These assets include your house, motor vehicle, life insurance payments, retirement account, household goods, and government benefits, such as Social Security benefits.

Chapter 7 Bankruptcy in Georgia Specifics

The average credit card interest rate is almost 18 percent. So, it does not take long for a family to fall behind on these payments, especially if a job loss is involved. When people lose their incomes, they are typically unable to pay credit card bills. Additionally, they often live off credit cards. This approach is not sustainable for more than a few months, at the most.

Chapter 7 eliminates credit card debts and most other unsecured obligations, such as medical bills. Some unsecured debts, such as student loans and back taxes, are dischargeable in certain situations.

At the 341 meeting, which usually happens about six weeks after the petition is filed, the trustee (person who manages the bankruptcy for the judge) verifies the debtor’s identity and intentions. The trustee also asks the debtor’s Georgia bankruptcy lawyer about possible fraud issues or other irregularities.

A few months later, the judge typically signs the discharge order. “Discharge” means the judge wipes out the legal obligation to repay the debt. But the debt itself is still there. So, if the creditor previously took adverse action, like a lien filing, a Georgia bankruptcy lawyer must deal with this matter in a separate proceeding.

Most people qualify for Chapter 7 bankruptcy. Their incomes must be lower than the average income for that family size in that state.

Chapter 13 Bankruptcy in Georgia Specifics

The so-called wage earner plan is usually best for people struggling with secured debt delinquency. About a quarter of Georgians say that their secured debt delinquency is so bad that they experience Post Traumatic Stress Disorder-type symptoms. This financial stress is justified. Legally, creditors can usually repossess property even if the owner is only one payment behind.

The initial paperwork in a Chapter 13 is much the same as it is in a Chapter 7. The big exception is the monthly debt consolidation payment proposal. This monthly payment must retire all allowed claims before the protected repayment period ends. This period is usually five years.

Allowed Claims

“Allowed claims” usually include all secured debt arrearage, like past due mortgage payments. This category also includes some unsecured debt delinquency, mostly past due alimony or child support payments, along with the trustee’s fee and some other administrative expenses.

Automatic Stay

The Automatic Stay remains in effect until the judge closes the Chapter 13 bankruptcy. So, as long as the debt consolidation payment meets minimum requirements, creditors must usually accept it. The income-based plan in a bankruptcy is much better than the “payment plans” that most creditors offer.

Consult an Athens Bankruptcy Lawyer in Georgia

At the end of the Chapter 13, the judge also discharges any remaining unsecured debts, as discussed above. In some cases, a Georgia bankruptcy lawyer can help debtors end their bankruptcies early, so they get their fresh starts sooner.

The different chapters of bankruptcy are for different debtors. For a free consultation with an experienced Athens bankruptcy lawyer in Georgia, contact Morgan & Morgan, Attorneys at Law, P.C. We routinely handle matters in Clarke County and nearby jurisdictions.