Historically, Georgia has not only been in the top 5 for bankruptcy filings, but also Georgians have been subject to low credit scores. But the good news is, Georgia foreclosures are going down, unemployment seems to be slowing, and bankruptcies are helping many get a fresh start.
A common question we hear is, what common debts can be discharged by filing bankruptcy? The advantage of bankruptcy, especially personal Chapter 7, is that you can eliminate the majority of your debts in a matter of months. However, you must be eligible, certain debts cannot be discharged,and you may lose assets.
What common debts can be discharged?
In some cases, you can discharge almost all of your debt. There are some debts you cannot discharge, including: taxes, alimony, and child support. However, you can technically discharge your mortgage, car payment, credit card debt, medical bills, and some other debts you owe.
Bear in mind, when you discharge debts, it’s not a free deal. While most of the time you can discharge debts, those debts come with a price. If you discharge your mortgage, your home will most likely be taken. If you cannot stay current on your home, you may have no other choice. If you discharge your car, technically this can be sold as well. This is Chapter 7 bankruptcy law, so let’s go over that and how Chapter 13 can help you.
Why file Chapter 7?
Chapter 7 bankruptcy is a liquidation. The biggest benefit is getting a fresh start. You may lose some if not many assets, but in most cases you lose nothing and discharge thousands if not tens of thousands in debt. If you file Chapter 7, creditors have no more reason to contact you. A common Georgia debt is credit card debt, and with Chapter 7 bankruptcy you can discharge all your debt for a minor loss.
Why file Chapter 13?
Chapter 13 bankruptcy on the other hand has the opposite effect: you do not liquidate your property. You want to keep your property in most cases. Sometimes you may not be eligible for Chapter 7 and be forced to file under Chapter 13. Why? If you make too much, the current Georgia median income is how this is factored in, you won’t be eligible for chapter 7.
Now, Chapter 13 has many advantages. You’ve been paying off your home for years if not decades. You love the place, but fear foreclosure is on the horizon. Now is the time to act, because if you wait to long and the bank forecloses, you have little choice but to let them take it. If you act beforehand, if you hire an attorney and file under Chapter 13, you can save your home and car. This works well if you have the money, a job, and can afford to keep up with the payments. Chapter 13 allows you to pay debts over a 3-5 year span, keep your car and home, and rebuild your finances.
Why not do nothing?
In some cases, people do nothing because they have nothing. While this strategy may seem odd, it does work in some cases. If you have lots of debt but few assets, it’s an option. However, most will want to take action immediately. Doing nothing can be very dangerous, though it’s an easy step.
What should you do? We recommend you consider your personal bankruptcy options, hire a lawyer, and immediately act to protect your financial future.
