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Chapter 7

Bankruptcy and Your Credit Score


What is a Credit Score

A credit score is a mathematical algorithm, typically updated monthly, used by lenders and service providers (i.e. utility companies) to determine your character, creditworthiness, and likelihood to make payments on time.

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Prior to the universal adoption of the FICO score in 1989, bankers would make a decision to lend money based on a “gut feeling”. Obtaining credit was all about who you knew. Many people were denied credit based on gender, race, nationality and marital status.

Conversely, the current credit score model allows any lender to obtain a picture of your current debts with outstanding balances, along with your repayment history.

Credit Bureaus and Credit Scores

While a credit score is a number, the data (your individual credit history) used to create is the score is provided to the bank or credit card company from a credit referencing agency, also known as a credit bureau.

Experian, Equifax, and TransUnion are the credit bureaus that compile your financial history and share this history with lenders by request.

Credit scores may vary slightly based on the credit bureau or lender that completed the calculation.

Improve your Credit Score

Lower credit scores can reduce your odds of being credit approved. A “good” credit score is typically over 700 (on a scale out of 850). If your credit score is not as high as you desire, follow these steps to increase your score:

  1. Dispute any incorrect findings
  2. Make all payments on time
  3. Pay off debt
    1. Keep credit card balances low
    2. Maintain a credit utilization of under 30%
  4. Credit utilization is your total debt divided by total available credit
  5. Assess unused credit card accounts
    1. Only close accounts if doing so will increase credit utilization %
    2. Fewer open accounts with the same overall debt may lower your score

Check Your Credit Report for Free

Visit Experian to check your credit report for free. Checking your own credit is a soft inquiry. Soft inquiries do NOT impact your credit score.

An updated free credit report can be accessed every 30 days. Outstanding balances on credit cards and loans will be reflected as well.

Monitoring your credit report allows you actively increase your score while becoming a more informed applicant.

Additionally, you can obtain a FREE credit score.

Bankruptcy and Your Credit Score

Chapter 7 and Chapter 13 can remain on your credit report 10 years. That being said, the three major credit reporting agencies voluntarily remove Chapter 13 bankruptcies after seven years. Chapter 7 bankruptcies remain on your credit report for the full ten years.

Read more on: the differences between Chapter 7 and Chapter 13

 

Filing for bankruptcy does not mean you are “doomed” for seven to ten years. A large majority of people notice an increase in the credit score within 12 months of filing for bankruptcy. This is a result of discharged debt and making payments on times.

Consult a Bankruptcy Attorney

The office of Cherney Law Firm LLC is committed to helping you get your finances and credit score back on track. Contact us at 770.485.4141 to schedule a free consultation to learn how bankruptcy can help you.

Georgia Chapter 7 Bankruptcy

Chapter 7 Bankruptcy in the State Of Georgia

Chapter 7 bankruptcy information for Georgia - Attorney Matthew Cherney

Georgia Chapter 7 Bankruptcy attorney

 

In Georgia, a Chapter 7 bankruptcy is legal proceeding asking the courts to discharge your debts. If successful, most unsecured debts will be forgiven, and the debtor gets a “fresh start”.  Once a chapter 7 is completed, the debtor is free of major debt. There are assets that you may be able to keep during and after your bankruptcy. How you structure your bankruptcy can have a major impact on the results that you get.

The State of Georgia has three United States Bankruptcy Court districts

Filing for Chapter 7 Bankruptcy in Ga.

Once you figure out which district you are living in, it is time to file.  There are two ways that you can do this in Georgia, you can file by yourself or you can hire an attorney to file for chapter 7 for you.

How to File for Chapter 7 by Yourself in Georgia

If you are confident in yourself and would like to file for chapter 7 on your own, there are many resources that will help you in the state of Georgia. There are online guides from companies like Upsolve, or you can go to the State of Georgia Bankruptcy  website to find out information on the forms that you need.

Hiring an Attorney to File Chapter 7 Bankruptcy in Georgia

If you are uncomfortable with all of the paperwork and ramifications of improperly filing for chapter 7 by yourself, you can hire an attorney to represent you. Hiring an attorney has a distinct advantage because that is what they do. An attorney will know all of the Georgia bankruptcy laws and can prepare and file all the needed paperwork on your behalf. They are also available to answer any questions throughout and even after your bankruptcy is discharged.

 

Georgia Chapter 7 Bankruptcy Exemptions

The purpose of filing for bankruptcy is to achieve debt relief in order to rebuild a sense of financial security.  In Georgia, exemptions in chapter 7 are very important. It is nearly impossible to do so if everything you own is taken from you during bankruptcy. Many people assume that you must lose everything including things such as your finances, your home, and your car when you file, but this is not true. According to United States Code §522, a person who files for bankruptcy may request certain exemptions, including interest on home loans and vehicles, any life insurance policies that have no yet matured, and other such assets.

It is important to note that some states will allow the person filing to choose between using Federal exemptions or state exemptions. The State of Georgia does not allow you to do this. You must use Georgia state exemptions. There are a few instances that you may be able to use federal non bankruptcy exemptions.

Some of the most common Georgia bankruptcy exemptions are :

  • Homestead
  • Vehicle
  • Wages
  • Personal

What happens to your property?

When you file for a chapter 7, you will most likely have to give up anything that isn’t exempt under Georgia law. The bankruptcy trustee will liquidate any non-exempt assets to pay your creditors.

 

Georgia Chapter 7 Means Test

 what is the Georgia Chapter 7 Means Test

The first step in filing Chapter 7 bankruptcy is to take a means test. Unless there is proof that you cannot afford to repay your debt based on your income and other factors, you cannot file under this chapter. Your income will be measured against the median income of a family living in your state that is comparable in size to your own family.

Median Income for Chapter 7 in Georgia

If your average income from the last 6 months is less than or equal to the median income, you will be considered eligible for Chapter 7.

In cases where your income is too high for Chapter 7, the court will determine how much disposable income you have in order to pay off some or all of your debt in a Chapter 13 plan should you choose to go that route. The court looks at your income and subtracts debt payments, living expenses and any other required payments to see what amount you can feasibly pay off each month.

Once a means test proves that you are eligible and you come up clean in all of the other areas determining eligibility, you must fill out all necessary forms and petition for property exemptions so that you can keep any necessary items, such as furniture or your car. This process is not simple, and a mistake could cause further harm, so make sure that you retain an educated Georgia bankruptcy attorney with years of experience in Chapter 7 laws and procedures. With such legal assistance, discharging your debt could result in the financial freedom that you’ve been dreaming of achieving.

 

Chapter 7 Credit Counseling

If you have taken the means test and it has determined that you are eligible for Chapter 7, the next step before you file is to take a pre filing credit counseling course. These courses are online and your attorney can usually provide you with the information on where it can be taken. After your bankruptcy has been discharged, you will also be required to take another credit counseling course. This is usually done with the same credit counseling agency that you used before you filed for your bankruptcy.

 

Georgia Bankruptcy Laws:

The state of Georgia has laws that will protect debtors from debt collectors, one of the most important is the Automatic stay.

Automatic Stay With Chapter 7

As soon as you file for a chapter 7 bankruptcy in Georgia, an automatic stay is imposed. The Automatic stay prevents creditors from pursuing any collection efforts from that moment forward. This includes taking legal action against you. Although the automatic stay is considered temporary, it will protect the debtor from creditors the whole time until the chapter 7 is discharged. At that point it will be no longer needed because once the Chapter 7 is discharged in Georgia, the debt is gone forever, Creditors can no longer attempt to collect the debts that have been discharged.

 

Chapter 7 Trustee in Georgia

You will be assigned a Georgia Chapter 7 Trustee

Once you have successfully filed for chapter 7, one of the next steps in the process is a court appointed trustee will be assigned to your case.  It is the Trustee’s job to overlook your case and go through all off the paperwork and details to make sure that there is no fraud. The Trustee will also assist in the liquidation of your assets.

It is important that all of your paperwork is  filled out correctly and that you list all of your assets. The trustee just wants to make sure that all assets will be distributed correctly. If the trustee somehow finds out that you are hiding assets, he can ask the court to deny or revoke your discharge.

 

Georgia Bankruptcy – The 341 Meeting

Once a trustee is assigned to your case, a 341 meeting will be scheduled. The purpose of the 341 meeting is to let the Trustee go through the paperwork you have filed. He will ask you questions about your debt and assets. Your attorney will be present with you during this meeting but cannot answer questions on your behalf. Creditors can also attend the meeting but they usually do not. It is mandatory that you appear to answer questions from the trustee about your case.   The questions asked by the trustee are all about the paperwork that you have filed. It is very important that you are honest with all of your answers. If you chose to hire an attorney, they will prepare you with everything that you need to know about what to expect at you 341 creditors meeting.

 

Georgia Chapter 7 Bankruptcy Discharge

 Last step is a Georgia Chapter 7 Bankruptcy discharge

 

A chapter 7 discharge is a permanent order from the court prohibiting creditors from taking any form of collection action on discharged debts. This includes legal action and communications with the debtor, such as telephone calls, letters, and personal contacts. While the debtor already had any temporary collection attempts halted with an automatic stay, the discharge is permanent.

The Courts will give the debtors creditors ample time (about 60 days from the 341 meeting) to file any objections. After that period has elapsed, they will send you a letter stating that your chapter 7 bankruptcy has been discharged.

Convert from chapter 13 to a chapter 7 in Georgia

Many times when a person is in a chapter 13 bankruptcy, they will be unable to keep up with their payment plan. When this happens, it is possible to convert from a chapter 13 to a chapter 7.

Tricks for Filing Chapter 7 in Georgia

There really are no tricks to filing for bankruptcy in the state of Georgia. Ir really has to do with whether you qualify or not. If you are in a situation that you think you may not qualify for chapter 7, you can always speak to your attorney about a chapter 13. By taking the means test, you will be able to see if you qualify for a chapter 7 or a chapter 13.

 

Georgia Chapter 7 Bankruptcy FAQs

How much does it cost to file Chapter 7 in Georgia?

The filing fee to for Chapter 7 bankruptcy protection in the state of Georgia is $335, the fee is set by the court and must be paid whether you have an attorney representing you or you are filing by yourself.

How do you qualify for chapter 7 in Georgia?

In order to qualify for Chapter 7, you must be below the median income level. The median income level is determined based on your household size. You must also take the means test to weigh your debt vs income

What is the maximum income for chapter 7 in Georgia?

The maximum income for chapter 7 in the state of Georgia is all dependant on the household size of the debtor(s)
1. $49,236.00
2 $63,850.00
3 $72,426.00
4 $85,763.00

What is the Chapter 7 means test?

The Chapter 7 means test determines whether an individual qualifies for Chapter 7. It breaks down your debt vs income to see if you qualify to file for chapter 7 bankruptcy relief. If you do not qualify for Chapter 7, the means test establishes what the individual may be required to pay back in Chapter 13.

Can I keep my house if I file for Chapter 7 in Georgia?

Yes, If you are current on the mortgage, you can maintain the monthly payments, and there is no equity in your home, If you are not current on your mortgage, you may want to consider a chapter 13 bankruptcy.

Can I keep my car if I file for Chapter 7 in Georgia?

if you are current on the payments, and you can maintain the monthly payments, yes.

Can I keep my cell phone if I file for Chapter 7 in Georgia?

Yes. There are personal exemptions that you can keep when you file for chapter 7 bankruptcy in Georgia

Can I file Chapter 7 in Georgia without my spouse?

Yes. There is no law that requires that you file jointly with your spouse if you are married.

Will Chapter 7 stop wage garnishment in Georgia?

After you file for chapter 7 bankruptcy protection in the state of Georgia, the bankruptcy laws require that any attempts to collect a debt be stopped. This includes wage garnishments.

Can Chapter 7 stop my Car from being repossessed?

Yes. However, if you are delinquent on the loan, and unable to work out an arrangement with the vehicle lender, you won’t be able to keep the vehicle for long.

Can Chapter 7 stop Foreclosure in Georgia?

Yes, but it will only buy you time. If you are delinquent on the loan, and unable to work out an arrangement with the mortgage lender, you won’t be able to keep the home for long.

What are Chapter 7 exemptions in Georgia?

The exemptions depend on the type of property. Your homestead exemption is 21,500.00. Your vehicle exemption is 5,000.00.

We are Chapter 7 Bankruptcy Attorney’s in Georgia

Cherney Law Firm Can help you file for chapter 7 bankruptcy protection.  We have 3 locations in the Atlanta, Georgia area and serve all of the cities in the Atlanta Metro area.

If you are considering whether a chapter 7 bankruptcy is right for you and you live in the state of Georgia, fell free to contact Cherney Law Firm. We are only a phone call or e-mail away and we can answer any questions that you have.  Cherney Law has handled thousands of bankruptcies in Georgia. We have seen every situation, there is no need to feel shame, we are here to help.

How Much will Chapter 7 cost?

We have Offices in Cobb, Cherokee and Fulton Counties and we offer 100% free consultations. Let us help you relieve the stress that your debt is causing you. Wage garnishment, repossession, foreclosure, credit card debt and judgments are our areas of specialty. We accept payment plans.

 

Tax Season: Bankruptcy and Income Tax Refunds

Tax season is upon us, and many people think about a fresh financial start this time of year

When it comes to filing yearly taxes, it is an opportunity to assess current goals and whether current financial strategies are working efficiently. If you have filed a Chapter 13 case and are having trouble making your current plan payments, you may want to consider a conversion from a Chapter 13 Bankruptcy to a Chapter 7 Bankruptcy.

The main benefit of converting from a Chapter 13 Bankruptcy to a Chapter 7 Bankruptcy is that you will no longer have a monthly trustee payment

You can use your income tax refund to bring any outstanding secured obligations current with the lender (e.g. vehicle, mortgage). You will only have one case filed with the same case number, even if you convert from a Chapter 13 to a Chapter 7. Only one bankruptcy filing will show on your credit, rather than having a dismissed Chapter 13 case and a later filed Chapter 7.

Another major benefit of converting your case from Chapter 13 to Chapter 7 is that you can add any debts incurred after you filed your Chapter 13 case. If you incurred new debt during your Chapter 13 that is making it difficult to make your Chapter 13 payments, then a conversion can help alleviate this problem. Some examples of new debt can include new medical bills, or an unexpected, costly home repair.

In order to convert your case from Chapter 13 to Chapter 7, a notice will need to be filed with the Court

There are certain conditions that need to be met. Your bankruptcy attorney will discuss these with you.

With a Chapter 7, there is no monthly payment plan like there is with a Chapter 13. You will still have the automatic stay in effect during the length of your case. However, the Trustee may sell any non-exempt assets that you have in order to pay your creditors. This is known as liquidation.

Once a Chapter 7 case is finished, you receive a discharge of all debts that were part of your case. This occurs in a much shorter time period than for a Chapter 13 case, since there is no repayment plan. In many instances, converting your case from a Chapter 13 to Chapter 7 may be less costly than filing for a Chapter 13 and then having to file a separate Chapter 7 if your Chapter 13 case was dismissed.

An experienced bankruptcy attorney will assess your case to make sure conversion makes sense for you. There can be major benefits to converting your case from a Chapter 13 to a Chapter 7, but it is critical to understand all the implications.

Wage Garnishments and Bankruptcy

If you are considering filing either a Chapter 7 or Chapter 13 Bankruptcy, it is important to understand what happens to any current wage garnishment that you may have. A wage garnishment is a court order that enables a creditor to take money out of your paycheck. Once a wage garnishment starts, it is difficult to stop. Bankruptcy is an effective method to stop a wage garnishment. For most types of debts, either a Chapter 7 or a Chapter 13 filing will immediately stop a wage garnishment. Many people consider filing bankruptcy solely because of a wage garnishment.

There are many different types of wage garnishments

Some of the most common types include: child support, alimony, income tax debt, student loan debt (federal and private) and judgment creditors (such as banks and credit card companies). Each type of wage garnishment has different rules that apply, and these rules are affected differently by a bankruptcy filing. Most of these rules are specific to your state of residency.
Each type of wage garnishment has different rules that apply, and these rules are affected differently by a bankruptcy filing. Most of these rules are specific to your state of residency.

A bankruptcy filing, whether a Chapter 7 or Chapter 13, puts an immediate stop to most wage garnishments

This is called the “automatic stay.” This stays in place for the duration of your bankruptcy case (or until further order of the bankruptcy court), which can last up to 5 years, depending on the type of bankruptcy that you file. A Chapter 7 will generally eliminate the debt completely.

A Chapter 13 may require you to pay the debt back, or a portion thereof, pursuant to a Chapter 13 plan. No matter the chapter of bankruptcy, once you receive a discharge, you will no longer have any of your wages garnished for that particular discharged debt.

Another thing to realize is that if you are unable to pay current debts and obligations, filing for bankruptcy may prevent a wage garnishment from ever starting in the first place. Meeting with a qualified Atlanta area bankruptcy and wage garnishment attorney can help you assess your situation to see if this would be a good idea for you. An attorney can help to determine the options that best suit your needs, and help guide you through the process for the best possible outcome.

The Bankruptcy Means Test

The Bankruptcy Means Test operates in two ways:

  1. It will determine if you qualify for Chapter 7 Bankruptcy; and/or
  2. If you do not qualify for Chapter 7 Bankruptcy, the means test establishes what you are required to pay your creditors in a Chapter 13 Bankruptcy.

What is the Means Test?

The means test is based on income and was established as part of the amendments to the Bankruptcy Code, and enacted by Congress in 2005 (BAPCPA). The means test takes into consideration the individual’s income for the six months preceding the month prior to filing.

If your income is less than the median income level, then you are presumptively eligible to file a Chapter 7 Bankruptcy

In Georgia, the current median income for a family size of 4 people is $85,763.00. For a family of 2, it is $63,850.00. If your income exceeds the median income level, you may likely be required to file a Chapter 13 Bankruptcy.

A majority of the deductions that are taken on the means test are standardized. Some of the actual deductions that can be taken are: income taxes, health insurance, mandatory retirement accounts, court-ordered domestic support and care for an elderly/ill/disabled household member.

Talk to a Bankruptcy Attorney

A qualified bankruptcy attorney will work with you to determine your eligibility for a Chapter 7 Bankruptcy, and will explain the pros and cons of Chapter 7 Bankruptcy versus other alternatives. Your attorney will help you complete and submit 2 forms: Chapter 7 Statement of Your Current Income and the Chapter 7 Means Test Calculation Form. Even if you do qualify for a Chapter 7 under the means test, there are additional considerations as to whether a Chapter 7 is the best choice for you, your family and your current financial situation.

How Bankruptcy Can Help With Back Taxes


If you owe back taxes (federal, state, or local), this can be a tremendous stress. Many people inquire as to whether filing bankruptcy can help deal with their tax debt. While every situation is different and needs to be assessed by a qualified bankruptcy attorney, there are ways in which a bankruptcy filing may help you with your back taxes.

If you owe money for back taxes, the IRS or State Revenue Department can garnish your wages or your bank account. Filing a bankruptcy will stop a tax garnishment. This is what is known as the automatic stay, which requires all creditors (including the taxing authorities) to immediately cease collection action. What happens to your taxes next depends on the chapter of bankruptcy you are filing.

Chapter 7 Bankruptcy

Certain taxes are dischargeable in a Chapter 7 bankruptcy. Here are the general rules regarding dischargeability of taxes in Chapter 7 Bankruptcy.

The Three-Year Rule

The tax return was due at least three years ago. Most returns are due on April 15 for the previous tax year. If the taxes were due from a return filed on April 15, 2017, they would be eligible for discharge (provided all other criteria are met) after April 15, 2020.  Do not forget to take extensions into consideration. This means that the three year rule applies to the extension date.

The Two-Year Rule

You must have filed the return at least two years before you filed your bankruptcy case. If you don’t file a return, sometimes the IRS will file one for you. Many bankruptcy courts do not consider that a return for purposes of fulfilling this rule.

The 240 Day Rule

The taxes must have been assessed at least 240 days prior to filing Chapter 7. When the taxing authority enters the liability on its records, they have “assessed” it. This doesn’t necessarily happen the minute you file your return. It could take weeks or months. In some cases, the taxing authority will audit your return and assess additional taxes years after the return is filed. This period could be tolled or extended if you filed an offer in compromise with the IRS or if you filed a bankruptcy case during that period that was discharged or dismissed.

Chapter 13 Bankruptcy

If you cannot discharge your income tax liability in Chapter 7, you can certainly treat the income tax liability in Chapter 13 Bankruptcy Plan of Reorganization. This means that you can propose to pay back the tax liability over a period of up to five years. The Chapter 13 will also stop future interest and penalties from accruing on the amount outstanding.

Your attorney will determine which taxes are and are not dischargeable in Chapter 7.

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