Frequently Asked Questions about Bankruptcy Law in Georgia

What is bankruptcy?

Bankruptcy laws give the honest debtor a fresh financial start. Chapter 7 and Chapter 13 cases are most frequently filed by individual debtors with consumer debts, while Chapter 11 cases are usually filed by businesses as a means to restructure debt.

Is bankruptcy good for me?

Many of us are struggling with debt in this economy. With the high unemployment rate, low credit availability, and the off-the-chart number of foreclosures, more and more people are finding that bankruptcy is the right choice for them and their financial futures. If you are bombarded by bills and need relief, filing for bankruptcy may be a good option for you.

Will filing for bankruptcy affect my credit?

Your credit will likely be affected if you file for bankruptcy, but that is not necessarily bad news. If you do not have great credit to begin with, once your debt is relieved, your credit score may start to improve not too long after bankruptcy.

Bankruptcy stops foreclosures, repossessions, lawsuits and wage garnishment?

When you file bankruptcy, the “automatic stay” against all collection efforts goes into effect. You, and all of your assets, are completely protected from your creditors.

Creditors must stop calling you and stop sending bills and letters.

If you have been sued, the lawsuit is stopped immediately and cannot go forward. If a creditor is garnishing your wages or has levied on your bank account, bankruptcy stops that as well.

The automatic stay also stops foreclosures, evictions and auto repossessions from going forward.

There are very few exceptions to the automatic stay. Two important exceptions are attempts to establish or collect alimony or child support obligations, and criminal prosecutions.

What is Chapter 13 bankruptcy?

Chapter 13 bankruptcy is a debt repayment plan administered by the bankruptcy court. Your case works like a debt consolidation plan – you make monthly payments to the Chapter 13 Trustee, who then disburses those funds to the creditors that have been included for payment in your case. That disbursement covers your obligation to those creditors. .

At the end of the repayment period, the debts have that been included for payment in the case are discharged. There are some important exceptions to that rule, which is one of the reasons that you should have an experienced bankruptcy attorney.

How long will my Chapter 13 payment plan last?

Your options depend upon the “means test”, which compares your household income against the median household income for the same size family in your state. If your household income is below your state’s median income, you can choose between a 3, 4 or 5 year payment plan. If your household income is above your state’s median income, you will have to file a 5 year payment plan.

When is my first Chapter 13 payment due?

Your first full bankruptcy payment is due 30 days after you file the case. You make the payments to the Chapter 13 Trustee, who distributes the payments to the creditors.

In most cases the Chapter 13 payment is deducted from your salary, much like income taxes. However, if you do not have a salary, the Court will allow you to make direct payments to the trustee. Direct payments can be made by mail or electronically.

Do I have to go to Court?

You must attend a creditors’ meeting. The chapter 13 Trustee conducts the meeting and will question you under oath about the paperwork you filed in your case. Your attorney will be there with you to assist. The meeting takes place approximately one month after you file the case.

The Court sets every case for a confirmation hearing. This takes place approximately 45 days after the creditors’ meeting. In most cases you will not need to appear at the confirmation hearing. The attorney will be there and will handle the case without you having to attend.The confirmation hearing is typically the last court date in a Chapter 13 case. From that point on the case is all about making the required payments.

What happens if I fall behind on the Chapter 13 payments?

If you have an unexpected financial problem during your chapter 13 case, you should immediately consult with your attorney. It is often possible to deal with changed circumstances by amending the chapter 13 plan.

The Trustee can file a motion to dismiss if your payments fall behind by more than 2 months. This sounds horrible, but the reality is that the Trustee does not want the case dismissed at all. They simply want you get back the Chapter 13 payments back on track going forward. As long as you can do that, the Trustee will work with us to find a solution and the case will not be dismissed.

How can I learn more about Chapter 13 bankruptcy?

If you think Chapter 13 bankruptcy may be a good way for you to take control of your debt situation, please contact Gastin & Hill to schedule a free initial consultation.

What is Chapter 7 bankruptcy?

Chapter 7 bankruptcy is a legal process by which most unsecured debts can be discharged, or wiped out. If you file a Chapter 7 bankruptcy, your assets (house, cars, etc.) can be sold by the bankruptcy trustee for the benefit of creditors. It is important to have an experienced bankruptcy attorney who can be sure that this does not happen to you.

What debts are not dischargeable in Chapter 7 bankruptcy?

Certain types of debt are not dischargeable in Chapter 7 bankruptcy, which means you must still repay these debts after bankruptcy. The following debts are usually not dischargeable:

• Child support and spousal support (alimony) obligations
• student loans
• Debts incurred by fraud or intentional wrongdoing
• Criminal fines and restitution

How do I know if I can file for Chapter 7 bankruptcy?

To file for Chapter 7 bankruptcy, you must qualify under the Chapter 7 means test. The means test first compares your income to the median income in Georgia. If your income is lower than Georgia’s median income, you can file for Chapter 7 bankruptcy. However, if your income is greater than the median income, other calculations regarding your income and allowable expenses are required to determine whether or not you can file for Chapter 7 bankruptcy. It is a complicated formula, which is yet another reason that you need a qualified, experienced bankruptcy attorney.

How can I learn more about filing for Chapter 7 bankruptcy?

If you are considering Chapter 7 bankruptcy, please contact Gastin & Hill to schedule a free initial consultation with one of our experienced bankruptcy attorneys.