Bankruptcy changes, the economy changes, our careers change, and sometimes our hopes and dreams get lost in the process. If you are unsure if bankruptcy is right for you, specifically Georgia Chapter 7 bankruptcy, it’s important to understand the process. This entails new legislation which changed Bankruptcy Code in 2005, while also understanding how unique each state is, including Georgia, when you want to file bankruptcy.
What new legislation?
The new bankruptcy laws discourage consumers filing Chapter 7 bankruptcy. Say for example you owe $50,000 because of a medical bill you received from an Atlanta hospital. You gross twice that a year, beyond expenses. Because you make a relatively high amount of money – $100,000 or more per year – you would not be eligible for Chapter 7. If you made more like $20,000 or $30,000 as an individual, or if you have a large family and your income is below average, you would then be eligible. Most state median incomes are below $50,000 for individuals. The changes made people who make more than the average of their state file Chapter 13 bankruptcy more.
What if you are eligible?
If you are eligible, it’s important to understand the bankruptcy process. You file a petition with the bankruptcy court in your area of Georgia. The court will then notify creditors of your bankruptcy filing, and the creditors will have to file a claim in a certain time window. Right after you successfully file with the Georgia bankruptcy court, all collections against you will stop – called an “automatic stay.” That means you will receive no more phone calls and letters; these must stop. A trustee is then appointed to handle your bankruptcy, the person who will work with creditors to get back their money. Your nonexempt assets will be liquidated, but exempt assets can be kept (and you have more options if you want to keep nonexempt assets, such as paying outside the bankruptcy). Once the trustee has sold all nonexempt assets you’ve made no arrangements to keep, he or she will give the money to the creditors. The process is then complete.
What if you aren’t eligible for Chapter 7?
You can then consider filing Chapter 13 bankruptcy. If you fail to pass the means test, where your current income is compared to your debts and bills, then you may be eligible for Chapter 13. Unless you owe monies well into the hundreds of thousands, you can file Chapter 13. Here, your exempt and nonexempt assets are not liquidated; you pay on debts over 3-5 years. You can better protect more valuable assets, and can use Georgia bankruptcy exemptions to do things such as protect equity in your home and car.
Who can help?
Understanding Chapter 7 bankruptcy is not easy. Few can handle this process alone. If you are unsure of where to start with your bankruptcy –- or if you’re eligible – then consider hiring a professional Georgia bankruptcy lawyer. He or she can be invaluable in understanding the process. A lawyer’s job is to educate you on the laws, save money, and protect assets.
