A recent study showed that one in five homeowners who file bankruptcy do so in order to stop a foreclosure. This is a prime example of how personal bankruptcy can be beneficial for Georgia residents.
What makes it different for Georgia residents? Georgia has a high unemployment rate, especially in major cities such as Atlanta.
But there is good news, as foreclosures in Georgia are less common, according to studies made in the tough year of 2009, than many other states. Georgia had a fraction of the total foreclosures that California had, for example.
Still, even with low foreclosure rates, unemployment rates pushing over 10 percent make it a tough market. This makes personal bankruptcy more valuable. You can save your home, you can eliminate debt, and you can get a fresh start.
Personal filing comes under Chapter 7 and Chapter 13 bankruptcy. How do they help Georgia home owners? Are you eligible? Let’s find out.
Eligibility
If you make too much money to file Chapter 7 bankruptcy, it’s actually not a bad thing. Home owners typically file under Chapter 13 bankruptcy.
Why?
You can save your home from foreclosure by filing Chapter 13. Chapter 7 is very good in other respects, such as eliminating credit card debt. But if you’re a employed individual or family member, you might be over the limit for Chapter 7.
How Chapter 7 Works
Chapter 7 is a liquidation. Your trustee sells your assets to pay back debt. Your debts in many areas are cleared, such as credit cards. However, for home owners the bad news is your home may not be exempt. There is exempt and nonexempt assets. If any asset is valued too high and not exempt, you might consider personal bankruptcy under Chapter 13.
How Chapter 13 Works
For home owners who are currently working, this is the prime option. You do not eliminate any debts. You create a plan for paying back the debts over 3-5 years. If you fall behind in mortgage payments because of a mountain of other bills, you can save your home.
Warnings On Personal Bankruptcy for Home Owners
If you are going to file under Chapter 13, do not wait too long. If you do wait until the lender forecloses, you may lose the home anyways. Technically, lenders can foreclose after you miss one payment, but that rarely happens and usually it occurs after a few missed payments. There is an entire process to this and an experienced bankruptcy attorney can help.
Hiring a Personal Bankruptcy Attorney
Filing bankruptcy is cheap in comparison to all the benefits, especially for Georgia home owners. Chapter 13 bankruptcy, for example, is only $274 (and Chapter 7 $299). You do have to pay a lawyer, but if you hire the right one, it saves you time and money.
