What Are Bankruptcy Laws?
Bankruptcy in the United States of America is regulated by federal law. The U.S. Bankruptcy Code controls the nature of bankruptcy proceedings and determines who may be eligible for bankruptcy.
When dealing with overwhelming debt, bankruptcy may offer a way out of the situation. In that case, it is essential to be aware of the bankruptcy laws and how they may apply to you as you seek debt relief.
You may also need to hire a bankruptcy lawyer to assess your options and find clarity on the complex areas of bankruptcy law.
Types of Bankruptcy
There are several types of bankruptcy under the United States Bankruptcy Code. However, the most common forms for individuals are Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 Bankruptcy in Georgia
In Georgia, you can file a bankruptcy case under Chapter 7 of the Bankruptcy Code. This type of bankruptcy gets Georgia bankruptcy courts to forgive your debts, excluding those debts that can’t be written off by law, such as alimony, child support, and certain taxes.
The bankruptcy trustee will collect your assets and personal property and sell them. The proceeds will be applied to paying creditors for your outstanding secured and unsecured debt, including personal and credit card debt, car loans, medical bills, and the trustee fee. Whatever debt remains is written off, giving you a fresh start.
However, you may not file for a Chapter 7 bankruptcy again until eight years have passed.
Eligibility for Chapter 7 Bankruptcy
Chapter 7 bankruptcy is meant for those who have hit rock bottom financially. It is not meant for people who might be able to repay their debts if the debts are restructured.
To avoid abuse, an applicant for a Chapter 7 bankruptcy should have an income below the Georgia median income for their household size.
If the applicant’s income does not fall within that range, they would have to take the Georgia Bankruptcy Means Test to be eligible for bankruptcy under Chapter 7.
The means test compares your household income to the majority of household incomes of similar-sized Georgia households. If your household income falls below the given parameters for similar homes, then you may qualify to file a Chapter 7 bankruptcy.
Pros and Cons of a Chapter 7 Bankruptcy
Chapter 7 bankruptcy allows you to permanently discharge all your non-exempt debts and protects you from creditor harassment. But your precious assets would be lost as the trustee would sell them to liquidate your debt.
Chapter 7 bankruptcy also exposes loan co-signers to creditor harassment and wage garnishment unless the co-signers also file for bankruptcy.
Chapter 13 Bankruptcy in Georgia
When you file a Chapter 13 bankruptcy, you are petitioning the court to allow you to restructure your debt and keep your assets safe from foreclosure or liquidation actions. You can reorganize your debt via a repayment plan that could last from three to five years, according to your disposable income.
Pros and Cons of a Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows you to conveniently keep your property and restructure your outstanding debt payment. You can treat your secured debt, unsecured loans, and co-signed debts differently and designate the priority of payments and amounts to be applied to each.
Loan co-signers are also protected from creditor actions, unlike the Chapter 7 bankruptcy.
However, with Chapter 13 bankruptcies, you may be regarded as bankrupt throughout the repayment period. Your credit rating may also be affected, making it difficult to get a mortgage or a credit card.
What Happens After You File a Bankruptcy Petition?
The bankruptcy process begins after you deliver your petition to the bankruptcy court in your district and pay the required filing fee(s). After filing, you may be required to complete a mandatory debtor education financial management course.
Once you have filed your petition, several things begin to happen:
- An automatic stay against any creditor action or lawsuit to recover debt takes effect.
- The bankruptcy trustee assumes legal control of your debts and any non-exempt property.
- The 341 meeting of creditors and the debtor occurs about a month after the bankruptcy filing. At the meeting, creditors can raise questions or objections to the proposed bankruptcy plan.The trustee and creditors have a 60-day period to challenge the debtor’s right to discharge the debt. After 60 days, if no objections have been raised, the court will terminate all allowable debts within three to six months.
- For a Chapter 13 bankruptcy, a confirmation meeting or hearing will be conducted before a bankruptcy judge. At the hearing, the proposed repayment plan may be confirmed or rejected.If your plan is approved, your repayment begins immediately. Your remaining debts will be discharged upon completing your repayment plan.
Georgia Bankruptcy Exemptions
The Georgia Code allows you to protect some assets up to a specific value from being subject to bankruptcy proceedings. These exemptions include the following:
- A maximum of $21500 exemption on your home equity. This could double to $33,000 in cases of joint bankruptcy with a spouse
- Up to $5,000 of the unused homestead exemption
- Up to $1,000 in motor vehicles
- Health aids
- Health or disability insurance benefits
- Income from alimony, pension, child support, or public benefits.
Why Hire a Bankruptcy Lawyer?
Bankruptcy is a complex process that involves lots of paperwork and is subject to frequent changes. It could be difficult for most people to handle alone without professional help hence the need for an experienced bankruptcy attorney.
There are many benefits to working with an Atlanta bankruptcy attorney, including that:
- You receive proper legal advice to help you decide whether filing for bankruptcy is the right option for you and what type of bankruptcy is appropriate.
- There are no mistakes on your bankruptcy forms, and the bankruptcy petition is drafted and completed according to bankruptcy law to avoid your petition being denied.
- You are protected from creditor harassment. Once bankruptcy has been filed, creditors are not allowed to contact you to demand repayment. They may only reach you through your bankruptcy attorney.
- You are aware of the workings of bankruptcy law and the Georgia bankruptcy court in your district, so you’re not taken by surprise during the process.
At Cherney Law Firm, LLC, your future and financial freedom are vital to us. We are here to help you escape financial hardship and out-of-control debt. Our lawyers can explain the process, draft and file the bankruptcy paperwork, and represent you in bankruptcy court.
We are willing to work with you from the initial consultation to the final bankruptcy decree. So, call us at (770) 485-4141 to schedule a free consultation, and let us help you as you seek a fresh start.