While you do not always have the option of choosing which form of bankruptcy to file, often the decision is vital to your future. If you’re a Georgia home owner, discharging your mortgage with a Chapter 7 bankruptcy may seem like giving up. On the other hand, for Georgia residents with tens of thousands in debt, paying these off with a Chapter 13 repayment plan may be too hard. This blog guide will help you see value in what form of bankruptcy you file.
Are you eligible?
First, find out if you’re eligible for bankruptcy, and which form you can file with. If you make too much money, you may be ineligible for Chapter 7 bankruptcy. In some rare situations, you may owe too much to file Chapter 13 bankruptcy. The Bankruptcy Code changes of 2005 made it more difficult to file Chapter 7, which is now based on the average income you or your family has in comparison to the Georgia median income.
Chapter 7 for Home Owners?
Chapter 7 bankruptcy can be smart for home owners who want to negotiate outside the bankruptcy for the home. However, you are in some risk of losing the home, especially if you cannot pay on the debt. If you want to discharge all your debts and be clear of everything, Chapter 7 can be advantageous. If you have a lot of property and assets you want to keep, Chapter 13 may be smarter.
Chapter 13 for Credit?
Chapter 13 bankruptcy can be best if you own a lot. Often you aren’t eligible for Chapter 7 if you have a high paying job which paid for all these assets. However, paying debts over time, in manageable installments, while also protecting your assets, can be quite effective. You pay on your debts over a longer period. You have legal protection. You can keep just about everything. If you have an income, Chapter 13 has many protections.
Foreclosure Problems
Georgia foreclosures have been some of the worst ever in the past 5 years. Right now, about 1 in 250 homes are being foreclosed on every month in Georgia. If you fear foreclosure, and if you want to avoid it, Chapter 7 is about discharging debts, not protecting assets. Therefore, you want Chapter 13 bankruptcy, if you file before the foreclosure begins.
Medical and Credit Debts
The most common reason for bankruptcy in all 50 states is medical debt. You or a loved one lacks medical coverage, gets hurt or sick, and the resulting hospital bill comes in at $500 a day for weeks. That is the kind of impossible debt that Chapter 7 bankruptcy can help with. You can discharge your main debts, namely medical and credit, and be free and clear in a matter of months.
Getting Legal Representation
If you’re unsure on how to get this process started, that’s more than understandable. Bankruptcy is not something you want to go through alone. However, it’s something you can use to your advantage. If you’re unsure of whether you are eligible, if you should choose Chapter 7 or Chapter 13, and how best to protect your assets, consult with an experienced Georgia bankruptcy attorney.
