The coronavirus pandemic has many people asking the question, When should you file for Chapter 7 in Athens, Georgia? Assistance programs, like stimulus checks and eviction moratoriums, have kept many families financially afloat during this time. But when these assistance programs end, most experts predict that bankruptcy filings will increase dramatically. Some specific situations are examined below.

Fundamentally, bankruptcy puts people in control of their own finances. Largely because the Supreme Court has largely gutted the Fair Debt Collection Practices Act, many moneylenders are very aggressive when it comes to unpaid bills. They dictate the repayment terms. 

Stopping Creditor Harassment in Athens, GA

When people file bankruptcy, moneylenders must stop these aggressive tactics. Furthermore, they know that unless they make some compromises, such as forgiving part of the debt, the debtor will legally walk away, leaving them with nothing.

A Georgia bankruptcy lawyer does more than file the required paperwork. An attorney represents you in court during this legal proceeding. Furthermore, all along the way, a Georgia bankruptcy lawyer gives you solid legal advice.

Medical Debt in Georgia

Each year, high medical bills force about 530,000 Americans into bankruptcy. Obamacare has helped keep the number lower, but its effect has largely been offset by rising medical bill inflation since the end of the Great Recession.

Cancer is a good example. Since the 1990s, cancer survival rates have increased dramatically. But the price of progress is high. Cancer treatment medical bills have increased even faster than the survival rate.

Health insurance companies routinely deny claims on technicalities, like the failure to get a referral. And, even if the insurance company pays, the deductibles and copays alone could be astronomical.

If you have a medical bill you cannot pay, you basically have two options. You can hope things somehow get better, or you can talk to a Georgia bankruptcy attorney. Medical bills are unsecured debts, so they are usually dischargeable in bankruptcy.

Pending Foreclosure, Eviction, or Repossession in Athens, GA

As mentioned, under pressure from the government or consumer groups, many banks have temporarily suspended the three most severe forms of adverse action. But these suspensions are only temporary. When they expire, the banks will want their money, and they will not be very patient.

Section 362 of the Bankruptcy Code immediately halts all adverse actions. That includes not only the Big Three mentioned above, but also things like collection lawsuits, wage garnishment, and harassing phone calls.

Banks can only bypass the stay if the judge gives them special permission. Such permission is almost impossible to obtain, unless the debtor threatens the collateral (“I’m going to burn down the house”). Debt delinquency, no matter how excessive, is normally not a valid argument.

It’s imperative to act quickly. Generally, repossession, foreclosure, and eviction are rather easy to stop, especially if the debtor files bankruptcy. But these things are very difficult to undo once they happen.

Keep in mind that this point highlights one of the ways in which filing for bankruptcy can actually help you avoid future financial difficulties. For example, if your car were to be repossessed, you might struggle to get to work every day. This could jeopardize your employment. Even if you’re able to get to your job without a car, doing so might require you to spend more than you can genuinely afford on taxis.

By filing for bankruptcy, you can protect your car from being taken away from you. This will eliminate the stress that might otherwise result from not knowing how you will get to work every day.

That’s just one example. Essentially, many people who could benefit from filing for bankruptcy are nevertheless reluctant to do so because they are worried about the way in which this decision might negatively impact their finances. These are understandable concerns. However, many who have eventually chosen to file for bankruptcy have discovered that doing so actually helped them guard against what could have been fire financial circumstances.

Excessive Credit Card Debt in Georgia

In terms of credit card debt loads, most financial advisors use the 10 percent rule. Most people must make double the minimum payment each month to retire credit card debt. That payment should not exceed 10 percent of your income. If you make $5,000 a month and double credit card payments are more than $500, you should at least consider filing Chapter 7. There is no realistic way you can retire the debt in a timely fashion without making sacrifices elsewhere.

Credit cards, like medical bills, are unsecured debt. Therefore, they are dischargeable in most consumer bankruptcies.

Revolving debt forces many people into bankruptcy. Ironically, revolving debt also helps people quickly recover from bankruptcy. 

Obtaining a credit card, charging something every month, and paying most of the balance every month drives credit scores higher. After all, your credit score measures responsible credit use and not your ability to pay cash for everything. Carrying a small balance from month to month means the bank charges a little interest and makes a little money. That fact usually drives your credit score even higher.

In the months and years after a discharge, it’s also important to stay current on vehicle payments and other secured debts. It’s also important to be upfront with potential lenders about your past credit problems, the lessons you have learned, and the changes you have made.

Job Loss in Athens, Georgia

Loss of a job is one of the most common reasons people choose to file for bankruptcy. Although losing a job can sometimes be nothing more than a temporary financial setback, there are instances when, for various reasons, someone may face enormous difficulties securing employment after being let go.

This can force them to rely on credit or their savings to a greater degree than they may have planned. As a result, they may eventually find themselves in significant debt. 

Again, no blog entry can tell you whether filing for Chapter 7 bankruptcy is absolutely the right decision given your circumstances. The fact that you lost a job doesn’t necessarily mean you should immediately file for bankruptcy without consulting with an expert first. However, if long-term unemployment has taken a major toll on your finances, you should strongly consider reviewing your case with an attorney to discuss your options. They can let you know if filing for Chapter 7 bankruptcy is a wise choice.

You should also be aware that, perhaps counterintuitively, there are some rare occasions when filing for bankruptcy may be a good idea even if you’ve just taken on a job that pays more than your past job did. This is because when deciding whether you qualify for Chapter 7 bankruptcy, a court will account for your income. If you make too much money, you won’t qualify. For every month that you work in a new, higher-paying position, your chances of qualifying for Chapter 7 bankruptcy may diminish.

This is why it’s important to act sooner rather than later if you’re thinking about meeting with an attorney to discuss the idea of filing for Chapter 7 bankruptcy. If you’ve taken on a new job that pays better than your last, while that may generally be a positive development in your life, it can also potentially have a negative impact on your ability to take advantage of the benefits Chapter 7 bankruptcy can offer.

Withdrawing from a 401(k)

Relying too heavily on credit is just one sign that a person’s financial situation may warrant filing for Chapter 7 bankruptcy. Instead of turning to credit cards, some people instead consider making early withdrawals from their 401(k) accounts when they can’t pay their bills. This may seem like a quick and easy fix, but it can have long-term consequences. To ensure you’re able to enjoy a comfortable retirement later, it might be a better option to consider bankruptcy. Talk about this with an attorney to learn more. 

Relationship Problems

Just as this blog can’t tell you if you definitely should or should not file for bankruptcy, it’s also not meant to be a replacement for relationship advice. If you are facing difficulties in your marriage, you may want to look into counseling to help you more effectively resolve them.

That said, it’s worth noting that the most commonly-reported source of relationship stress for couples is money problems. What may otherwise be a strong and respectful marriage or partnership could be on the rocks because of money issues for which there are possible solutions. Although no one can promise that filing for bankruptcy will save a marriage, many couples have found that deciding to file for bankruptcy helps them focus on improving their financial situations together instead of fighting about them. If you and your spouse or partner have been arguing about money and you’re considering meeting with an attorney to ask about filing for Chapter 7 bankruptcy, include them in the meeting to demonstrate that you care enough about making wise financial decisions in the future that you want them to be involved in such decisions.

Reach out to a Skilled Georgia Bankruptcy Lawyer Now

If you are experiencing financial stress, you should at least consider filing bankruptcy. For a free consultation with an experienced Georgia bankruptcy attorney, contact Morgan & Morgan Attorneys at Law P.C. at (706) 843-2905. Convenient payment plans are available.

Originally published October 19, 2020 and updated October 25, 2021.