Are you struggling with your finances? Chapter 13 bankruptcy might be the right option for you to pursue. However, managing it alone can be very difficult. This is where the help of a Chapter 13 bankruptcy lawyer in Cartersville, GA becomes beneficial.

If you’re considering bankruptcy, you may be wondering about your eligibility for filing. A knowledgeable lawyer can help you know more about your eligibility in bankruptcy. In this article, we will explain more about how beneficial bankruptcy is for you and how a lawyer can help every step of the way.

Quick Summary:

• Chapter 13 bankruptcy is a debt relief option for regular-income individuals who can manage their debts over time. It offers benefits like debt restructuring, property retention, and protection from creditors.
• Individuals must mainly have regular income to be eligible for Chapter 13 bankruptcy. They must meet income limits and debt thresholds and act in good faith. Before filing, individuals must also undergo financial counseling and gather necessary documentation.
• A bankruptcy lawyer can provide legal guidance to help individuals handle the Chapter 13 bankruptcy process. They can help represent clients in court and offer personalized financial assessments.

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is a legal option for regular-income individuals who can manage their debts over time. Unlike Chapter 7 bankruptcy, which liquidates assets, Chapter 13 enables debtors to create a repayment plan.

The repayment will last around three to five years. It also involves monthly payments to a bankruptcy trustee. This trustee distributes the funds to creditors based on the agreed terms.

What are the Benefits of Filing for Chapter 13?

In bankruptcy, debts are also classified as secured and unsecured. Secured debts must usually be paid in full, but the terms can be adjusted. These can include mortgages, car loans, and more. 

Meanwhile, unsecured debts may be paid at a reduced rate or discharged entirely. Credit card debt is considered an unsecured debt. Unsecured debts help debtors regain control without immediate creditor pressure.

The way Chapter 13 manages these debts is just one benefit it covers. Chapter 13 bankruptcy can offer many different benefits, including:

Debt Restructuring

The main benefit of Chapter 13 bankruptcy is debt restructuring. It allows individuals to reorganize debts into manageable payments over three to five years.

Debtors can propose a repayment plan to the bankruptcy court based on income and expenses. This ensures payments are affordable while addressing outstanding obligations.

Retention of Property

Another advantage of Chapter 13 is the ability to retain property. This includes properties like homes and vehicles. Unlike Chapter 7, which liquidates non-exempt assets, Chapter 13 allows individuals to keep their assets while repaying debts.

Debtors can catch up on missed mortgage or car payments through their repayment plan. This helps prevent foreclosure of properties.

Protection from Creditors

Filing for Chapter 13 provides essential protection from creditors through an automatic stay. This automatic stay stops all collection activities immediately upon filing. It helps protect debtors from repossession or foreclosure during the bankruptcy process.

This provision prevents creditors from initiating lawsuits, garnishing wages, or contacting debtors about unpaid bills. It allows individuals to focus on their repayment plan without the stress of creditor harassment. Finally, it provides space to reorganize finances under court supervision.

Am I Eligible for Chapter 13 Bankruptcy?

Processing your eligibility for bankruptcy in Cartersville can be difficult. You must meet specific eligibility criteria established by the U.S. Bankruptcy Code. This process is designed to assist individuals with a regular income who seek to reorganize their debts. Thus, you are required to have the following:

Regular Income

The main requirement for filing Chapter 13 bankruptcy is that the debtor demonstrate a regular income. This income forms the basis of the repayment plan submitted to the court. Without a consistent income stream, debtors could not make the required monthly payments in their plan.

Regular income can come from various sources. It can be wages from employment, self-employment earnings, rental income, or government benefits. The income must be reliable and sufficient to cover living expenses while allowing for debt repayment.

Income Limits and Debt Thresholds

Another one of the bankruptcy qualifications in Georgia is the income limit. Chapter 13 bankruptcy has defined limits regarding how much debt an individual can have. As of 2024, individuals can file for Chapter 13 if their combined secured and unsecured debts do not exceed $2,750,000.

If a debtor’s income is below the median income for their state, they may propose a three-year repayment plan. If their income exceeds the state median, the repayment plan usually extends to five years. For Georgia, the median income for one earner is $62,468.

Good Faith

The good faith requirement is another vital aspect of eligibility for Chapter 13 bankruptcy. Debtors must show that they are acting honestly in their situation. They must have sincere intentions to repay their debts under the proposed plan.

This involves creating a realistic repayment plan reflecting the debtor’s financial situation. Courts will assess whether the proposed plan is feasible. They will also check whether it meets legal standards for repayment.

A debtor cannot receive a discharge under Chapter 13 if they obtained a prior discharge in a Chapter 7, 11, or 12 case within the past four years. Furthermore, they are also ineligible if they received a discharge in a Chapter 13 case within the last two years.

What Steps Should I Take Before Filing a Chapter 13 Bankruptcy?

Before filing for Chapter 13 bankruptcy, you must undergo financial counseling. This is a legal requirement that can help in the bankruptcy process. The U.S. Bankruptcy Code requires a credit counseling course from an approved agency within 180 days before filing.

Credit counseling can last 60 to 90 minutes. It helps individuals assess their financial situation. It also helps them explore alternatives to bankruptcy and develop a budget plan.

During counseling, participants evaluate their income, expenses, and debts to determine if they qualify for Chapter 13. Other options may be better suited otherwise. A positive assessment improves the case for filing under Chapter 13.

Gathering Documentation

After deciding to file for Chapter 13 bankruptcy, gathering all necessary documentation is essential. It helps you get a head start on filing for bankruptcy. The vital documents can include:

• Income Statements: Recent pay stubs or proof of income from all sources.
• Debt Records: A list of all creditors with amounts owed and account numbers.
• Property Information: Document any owned properties, including real estate and vehicles.
• Monthly Living Expenses: A detailed account of monthly expenses like housing, utilities, and food.
• Tax Information: Federal tax returns for the past two years and statements regarding unpaid taxes.

Can a Bankruptcy Lawyer Help Me With Filing Chapter 13?

By completing financial counseling and gathering the necessary documentation, you can finally prepare for filing bankruptcy. However, it may still be difficult to do it yourself. You may still need the help of a bankruptcy eligibility attorney in Cartersville.

A qualified bankruptcy attorney is your lifeline in the bankruptcy process. They can facilitate a smoother filing process. In addition, they increase the chances of successfully discharging your debts. A good attorney can offer:

Legal Guidance and Protection

A bankruptcy lawyer provides important legal guidance throughout the bankruptcy process. Their experience can help you process complex legal requirements. They can help you comply with all regulations. Finally, they can protect your rights during the proceedings.

Filing Assistance and Court Representation

Lawyers offer step-by-step assistance with the filing process. They help prepare necessary documents, submit filings on time, and represent clients in court. This support simplifies the often overwhelming process and increases the likelihood of a successful outcome.

Personalized Financial Assessment

A bankruptcy lawyer can create a personalized financial assessment to evaluate your unique circumstances. They can recommend the most suitable bankruptcy option by analyzing income, debts, and expenses. They can develop a tailored repayment plan that aligns with your financial situation.

Find if You’re Eligible for Chapter 13 Bankruptcy With Help From Our Lawyer!

Are you facing financial challenges and considering Chapter 13 bankruptcy as a solution? Then, you might need the help of an experienced Chapter 13 bankruptcy lawyer in Cartersville, GA. At the Law Office of Jeffrey B. Kelly, our lawyers are guaranteed to guide your debt relief to success.

Understanding the eligibility requirements and benefits of Chapter 13 is only the first step in the process. With help from our attorneys, we can provide valuable insights and support in your journey to financial stability.

With our help, you can take proactive steps toward achieving financial stability. All the while, you can still retain control over your assets. Don’t hesitate to reach out for assistance. Call our team today and get a free consultation!

Facing the complexities of debt can be daunting, especially when considering legal options like Chapter 13 bankruptcy. For residents seeking Chapter 13 bankruptcy in Cartersville, Georgia, understanding who qualifies for this type of bankruptcy is crucial. It is important to note that not everyone qualifies, and the criteria can vary based on income, debt types, and other financial considerations.

Chapter 13 bankruptcy in Georgia is designed for those who have a regular income and can commit to a repayment plan over three to five years. Understanding these requirements can help potential filers in Cartersville assess whether Chapter 13 is the appropriate path for achieving financial stability. By delving into the specifics of eligibility, individuals can make informed decisions about managing their debt and taking steps toward a more secure financial future.

Quick Summary:

• Chapter 13 bankruptcy in Cartersville, Georgia, offers individuals with regular income a structured repayment plan to manage their debts. Unlike Chapter 7 bankruptcy, which involves liquidation of assets, Chapter 13 allows debtors to retain assets like homes and cars, provided they stay current on payments within the court-approved plan. 
• To qualify for Chapter 13 bankruptcy in Georgia, individuals must meet several criteria. These include not being a business entity, adhering to specific time limits if previously filed for bankruptcy, completing mandatory credit counseling, filing tax returns for the last four years, and demonstrating sufficient income to cover expenses and repay debts. The process aims to provide a structured path for debt repayment while offering protection against foreclosure and other creditor actions.
• Chapter 13 bankruptcy offers unique benefits such as stopping foreclosure, lowering secured loan rates, and allowing overdue child support repayment. It manages debt without extra charges, protecting homes and vehicles. Bankruptcy attorneys offer crucial guidance for navigating Chapter 13 and exploring other tailored debt relief options.

Chapter 13 Bankruptcy: A Repayment Plan for Debt Relief

Chapter 13 bankruptcy is a legal process that allows individuals with regular income to create a court-approved repayment plan for their debts. This plan typically lasts for three to five years, during which you make monthly payments to a court-appointed trustee who then distributes the funds to your creditors.

Think of it as a structured way to catch up on your debts and get a fresh financial start. Unlike Chapter 7 bankruptcy, which eliminates some unsecured debts entirely, Chapter 13 focuses on repayment, allowing you to keep valuable assets like your car or house as long as you stay current on your secured debts (mortgages, car loans) within the plan.

In contrast, Chapter 7 bankruptcy is a liquidation process where some of your assets may be sold to pay back creditors. However, Chapter 7 often has stricter income limitations and can leave a lasting mark on your credit score.

How Do I Qualify for Chapter 13 Bankruptcy in Georgia? 

While Chapter 13 offers a path to financial recovery, there are specific requirements you need to meet to be eligible. Here’s a breakdown of the key factors to qualify for Chapter 13 in Georgia:

You Are Not a Business

Any individual and sole proprietors with regular income can file for Chapter 13 bankruptcy. If you own a business by yourself or with a partner, you can file for Chapter 13 in your own name for debts you’re personally responsible for. But stockbrokers and commodity brokers can’t file for Chapter 13.

Companies like corporations and LLCs cannot file for Chapter 13 and must use Chapter 11 instead.

Previous Bankruptcy Rules

You can file for Chapter 13 even if you’ve had a bankruptcy before, but there are time limits. If you got a Chapter 13 discharge in the last 2 years or a Chapter 7 discharge in the last 4 years, you must wait before you can get a Chapter 13 discharge again.

Recent Bankruptcy Case Dismissals

You can’t file for Chapter 13 or Chapter 7 if your previous bankruptcy case was dismissed in the last 180 days because you didn’t follow court orders, didn’t show up in court, or asked for the case to be dismissed after a creditor tried to lift an automatic stay.

Credit Counseling

You need to get credit counseling from an approved agency within 180 days before filing for Chapter 13. You must show the court a certificate proving you did this. If the agency made a debt management plan, you need to give a copy to the court too.

Debt Limits

Understanding Chapter 13 debt limits Georgia is crucial. To qualify for Chapter 13, your total debts, including both secured debts (like a mortgage) and unsecured debts (like credit card bills), must be less than $2,750,000 when you file for bankruptcy  (11 U.S.C. § 109(e)). 

Tax Returns

You must have filed your state and federal tax returns for the last four years before you can file for Chapter 13. You need to give a copy of your latest federal tax return to the trustee at least 7 days before your first meeting with creditors.

Repayment Plan

You need to have a plan to repay certain debts in full. This includes priority debts like child support and some taxes, and secured debts like a mortgage that must be kept current during the plan.

Repay Unsecured Creditors

You must pay back nonpriority, unsecured creditors (like credit card companies) at least the amount equal to your nonexempt property over the repayment plan. Nonexempt property includes things like household items and some equity in your home or car.

Enough Income to Pay Debts

You must have enough income to cover your expenses, required payments to priority and secured creditors, and payments to unsecured creditors. Your income can include your spouse’s income, wages, self-employment earnings, Social Security benefits, and unemployment benefits. You also need to pay the trustee a commission based on your total payments.

What Are the Benefits of Chapter 13 Bankruptcy? 

Choosing Chapter 13 bankruptcy can help you in ways that other debt relief options can’t. Here are some of the benefits:

• You don’t have to pay interest on credit card and finance company debt.
• You won’t get interest or penalties on tax debt.
• It can stop you from losing your home to foreclosure.
• It might get rid of a second mortgage.
• It lowers interest rates on loans backed by collateral.
• It reduces the amount you owe on secured loans to the value of the collateral.
• You can pay back overdue child support.

Finding Relief Through Chapter 13 Bankruptcy in Cartersville, Georgia

Drowning in debt can feel overwhelming, leaving you unsure of where to turn. If you’re struggling to manage your finances, Chapter 13 bankruptcy in Cartersville, Georgia may be a solution you haven’t considered. 

However, dealing with the legalities of Chapter 13 bankruptcy can be complex. The Law Office of Jeffrey B. Kelly understands the financial challenges you face. Our Cartersville bankruptcy attorneys can help you determine if you qualify and guide you through every step of the process.

We understand that debt can impact more than just your finances; it can take a toll on your mental and emotional well-being.  We offer compassionate and personalized legal representation, working tirelessly to achieve the best possible outcome for your situation.

Don’t wait any longer to take control of your financial future. Contact the Law Office of Jeffrey B. Kelly today for a free consultation. We can also explore other debt relief options, including Chapter 7 bankruptcy, student loan debt solutions and foreclosure defense. Let us help you find the path to financial freedom.

Facing financial challenges and considering bankruptcy can be overwhelming. Understanding the complexities of the bankruptcy process is crucial to making informed decisions about your financial future. In this guide, we’ll provide you with the essential bankruptcy information you need Rome GA, to navigate this challenging terrain.

At the Law Office of Jeffrey B. Kelly, we recognize the stress that financial difficulties can bring. Our dedicated team is here to help you through the intricacies of bankruptcy, providing legal guidance and personalized solutions tailored to your unique situation. With years of experience and a commitment to client success, we aim to empower you with the knowledge needed to make confident decisions about your financial well-being.

Are you struggling with debt and seeking reliable guidance on bankruptcy? The Law Office of Jeffrey B. Kelly is here for you. Our team of experienced Rome bankruptcy lawyers are here to help individuals like you understand their options and navigate the bankruptcy process with confidence.

Don’t let financial difficulties control your future. Contact the Law Office of Jeffrey B. Kelly today for a free consultation. 

Quick Summary:

Here’s a brief overview of everything you need to know:

• Understand the nuances of Chapter 7 and Chapter 13. While Chapter 7 is quick and cost-effective, Chapter 13 involves repaying debts over several years, making it suitable for specific financial situations.
• Learn how filing for bankruptcy in Georgia provides relief from overwhelming debt. Recognize the importance of the state’s rules in determining what belongings you can keep.
• Discover how bankruptcy can eliminate various debts, from credit cards to medical bills. Assess whether bankruptcy will discharge enough debts to make it a worthwhile option.
• Be prepared for the time commitment—Chapter 7 takes at least 6 months to a year, and Chapter 13 lasts at least 5 years. Understand eligibility criteria and the impact on your credit report.
• Explore the exemptions available in Georgia, safeguarding home and vehicle equity, personal possessions, retirement funds, and more.
• Understand the costs involved in filing for bankruptcy in Georgia, including court fees and additional expenses. Learn about the post-filing process, including meetings and required courses.

If you’re struggling with debt, our experienced professionals at the Law Office of Jeffrey B. Kelly are here to guide you. Schedule a free consultation to explore personalized legal solutions for a fresh financial start.

What is Bankruptcy? 

Bankruptcy is a legal process designed to provide individuals and businesses relief from overwhelming debt and financial struggles. It is a court-supervised procedure that aims to help debtors eliminate or repay their debts under the protection of the bankruptcy court.

What’s the Right Bankruptcy Chapter for Me in Georgia? 

Bankruptcy comes in different types, and they each have their own rules. The two main ones for people are called Chapter 7 and Chapter 13.

• Chapter 7 is a popular choice for bankruptcy because it’s fast and inexpensive. It’s suitable for those with essential belongings but may not be ideal if you have valuable assets. In Chapter 7, unnecessary items can be sold to pay creditors. However, there’s a risk of losing significant assets like a house or car, especially if you’re behind on payments, as there’s no option for a payment plan to catch up.
• Chapter 13 is about repaying what you owe over three to five years. You get to keep everything you own, and the payment plan helps in tough financial situations. It’s handy for catching up on late payments to save your home or car. You can also use it to manage debts you can’t completely get rid of in bankruptcy.
  • But it can be costly, and not everyone can afford the monthly payments. Businesses can’t use Chapter 13 either. If you’re a business owner, it’s important to understand small business bankruptcies before deciding which option is right for you.

Bankruptcy is a legal tool that can offer a fresh start for those overwhelmed by debt, providing a structured way to address financial challenges. However, it’s essential to understand the specific implications of bankruptcy, as it can impact credit scores and financial options in the future. Seeking legal advice is crucial to navigating the process successfully.

Georgia’s Bankruptcy Process: How Does It Work?

Filing for bankruptcy in Georgia is similar to other states. It follows federal law, not state law, and helps break the agreements between you and your creditors, giving you a new beginning. However, Georgia’s rules are important because they decide what belongings you can keep. We’ll also share more details about filing after covering some basics.

Can Declaring Bankruptcy in Georgia Wipe Away My Debts?

Bankruptcy can eliminate various debts, including:

• credit cards, 
• overdue utilities, 
• medical bills, and
• personal loans. 

You may also be able to remove a mortgage or car payment if you’re willing to give up the associated property. However, not all debts can be discharged, such as domestic support arrearages and recent tax debt. Student loans are generally challenging to erase, but recent changes in 2023 aim to simplify the process with a new student loan bankruptcy form. It’s important to assess whether bankruptcy will eliminate enough debts to make it a worthwhile option.

How Much Time Does Bankruptcy in Georgia Usually Take?

If you’re thinking about filing for bankruptcy in Georgia, be ready for it to take at least 6 months to a year for Chapter 7 or at least 5 years for Chapter 13. The duration might change based on your financial situation or if there are any issues with the payment plan or challenges from creditors.

In Chapter 7, the process wraps up when the court approves payments by the bankruptcy trustee. Chapter 13 isn’t finished until all necessary payments are made, and the court recognizes the completion of your payment plan.

Remember, filing for bankruptcy will be on your credit report for 7 to 10 years. Chapter 7 stays for 10 years, while Chapter 13 usually disappears from the credit report in about 7 years.

Am I Eligible for Bankruptcy in Georgia? 

To qualify for bankruptcy, there are several requirements you need to meet. If you’ve filed before, you must check if enough time has passed to file again, which varies based on the previously filed chapter and the one you plan to file.

For Chapter 7, you qualify if your family’s income is below the median for your state. Use the Quick Median Income Test online to check. If you make too much, you might still qualify after the “means test.” If you can’t afford a Chapter 13 plan, you qualify for Chapter 7.

Chapter 13 can be costly. To qualify, you pay the larger of 

• your priority debt, 
• nonexempt property value, or 
• disposable income. 

What Are the Bankruptcy Exemptions in Georgia?

People filing for bankruptcy can safeguard certain home and vehicle value, personal belongings, retirement funds, and other assets. Here’s a list of common Georgia bankruptcy exemptions that filers often use.

• Homestead Exemption – In Georgia, the homestead exemption allows you to keep the house you live in, as long as there isn’t too much value in it. This exemption helps protect your property from the bankruptcy trustee and creditors.
  • You can exempt up to $21,500 of your home equity when filing for bankruptcy in Georgia. If your spouse co-owns the home and you both file for bankruptcy together, this amount doubles to $43,000.
• Wage Exemption – You can keep 75% of what you earn each week after necessary expenses, or 40 times the higher of the state or federal minimum wage. Bankruptcy judges can decide to let people with low incomes keep more of their wages.
• Motor Vehicle Exemption – If you own a car, you can protect $5,000 of its worth from being included in the bankruptcy.
• Jewelry – You can keep jewelry worth up to $500.
• Tools of the Trade Exemption – You can keep tools, books, and other essential work items worth up to $1,500.
• Personal Property Exemption – According to Georgia law, you can protect certain household items. You can safeguard a total of $5,000 for all items, but no single item can be worth more than $300. These items include furniture, household goods, clothes, appliances, books, musical instruments, crops, and animals.
• Support Exemption – In Georgia, money for alimony and child support needed to care for your kids is protected and cannot be taken in bankruptcy.
• Public Benefits Exemption – According to Georgia bankruptcy rules, specific public benefits are safe from bankruptcy actions. These include unemployment pay, social security benefits, and public assistance. 
  • Additionally, money from worker’s compensation, veteran’s benefits, old-age assistance, aid to blind or disabled persons, and crime victim’s compensation is also protected.
• Pension and Retirement Account Exemption – Georgia law keeps most pension and retirement plans safe. This includes the following: 
  • Tax-exempt retirement accounts such as 401(k)s, IRAs, and certain benefit plans. 
  • It also covers public office or employee plans. 
  • Additionally, reasonable and necessary payments due to illness, disability, death, age, or length of service under a pension or annuity plan are protected.
• Other Exemptions – Under Georgia law, additional funds and benefits can be protected. This includes money from health or medical savings accounts, medically prescribed health aids, wrongful death benefits needed for your support, and more. A Georgia bankruptcy attorney can help you figure out which other exemptions might be relevant to your specific situation.
• Wildcard Exemption – In Georgia, you can keep personal belongings you own worth up to $1,200 as per the law. If you haven’t used all the homestead exemptions, you can use up to $10,000 of the remaining amount to safeguard additional personal property using the wildcard exemption. This is especially helpful if your exemptions don’t cover all your belongings.

What Occurs After Submitting A Bankruptcy Filing in Georgia? 

Following your bankruptcy filing in Georgia, your creditors will generally cease contacting you within a few days due to the court issuing an “automatic stay” notice. This legal order prevents most creditors from requesting payment. The subsequent actions include:

• Submitting financial documents to validate the details in your bankruptcy paperwork.
• Attending the 341 meeting of creditors, a mandatory requirement for all filers.
• Completing a debtor education course and providing the completion certificate.

These steps are essential before obtaining a Chapter 7 bankruptcy discharge. For Chapter 13 filings, there’s an additional requirement to attend a repayment plan confirmation hearing and adhere to the three- to five-year payment plan.

Ready to Navigate Bankruptcy? Contact Our Rome Bankruptcy Attorney Now!

Are you struggling with debt and seeking reliable guidance on bankruptcy? The Law Office of Jeffrey B. Kelly is here for you. Our trusted team is well-equipped to help individuals like you understand their options and navigate the bankruptcy information you need in Rome, Georgia, as well as its process, with confidence.

At the Law Office of Jeffrey B. Kelly, we understand the stress and uncertainty that financial struggles can bring. Our knowledgeable legal team is dedicated to transforming financial challenges into success stories. Say goodbye to financial stress and hello to a fresh start! Don’t let financial challenges dictate your future. Take Action Now! Schedule your free consultation with the Law Office of Jeffrey B. Kelly today!

Aside from bankruptcy, we provide legal services on personal injury in Dalton, Kennesaw, Douglasville, Cartersville, Dallas, and Marietta. 

When someone goes to a bankruptcy law firm and asks for advice, it is often quite surprising to hear them say, “I’m not sure which Chapter I qualify for?” or “Will my debts be wiped out?” or “Do I have to disclose assets?”. In response to these often asked questions, this article will discuss the types of bankruptcies.

Bankruptcy starts with the filing of a petition in the bankruptcy court. This post will be focusing on two of the most common types of bankruptcies – Chapter 7 and Chapter 13. However, if I file for bankruptcy, what will happen? Let’s start this post by answering that question.

What Happens If I file?

To file for bankruptcy, you must go to federal court. Once your bankruptcy case is filed, your creditors must quit chasing your debts. The court will then ask for information such as:

• Total debt owed
• A list of all your debtors
• A complete income statement
• A breakdown of your outgoing expenses
• A breakdown of your outgoing expenses

In bankruptcy court, you can represent yourself. You can also engage a bankruptcy lawyer to represent you and guide you through the lengthy process of declaring bankruptcy. Debt discharge or reorganization in bankruptcy court might take a long time. If you hire a lawyer, they can explain the timeframe in your bankruptcy case.

Chapter 7 and Chapter 13 Bankruptcies

Chapters 7 and 13 are bankruptcy chapters within the United States Bankruptcy Code. They are intended to help people who have become unable to pay their debts. Some people believe that Chapter 7 and 13 bankruptcy cases are the same thing. They are not the same. They have different rules and procedures.

The primary distinction between Chapters 7 and 13 bankruptcy is that you lose your property under a Chapter 7 bankruptcy, and it becomes property of the bankruptcy court. Under a Chapter 13 bankruptcy, you do not lose your property, but that property must be paid to your creditors in installments over three to five years.

What Type of Bankruptcy Is Chapter 7?

Bankruptcy Chapter 7 can sometimes refer to as liquidation bankruptcy because all of your assets are liquidated or sold to pay off as much of your debt as possible.

In some conditions, it is possible for a person filing for Chapter 7 bankruptcy to keep some types of property by paying the value of that asset into the Chapter 7 estate before any distribution takes place.

The following consist of the types of debts that are generally discharged in a Chapter 7 bankruptcy:

• Medical bills
• Credit card statements
• Bills for utilities
• Loans to individuals
• Certain governmental legislation

How Do I Meet the Criteria for Chapter 7?

You may apply for Chapter 7 bankruptcy without an attorney, but you should strongly consider hiring one. There is a great deal at risk, and the process may get rather complicated. Chapter 7 typically takes four to six months to complete.

The following are the usual criteria for Chapter 7 bankruptcy eligibility:

• You must pass a “means test,” in which your income, assets, and spending are examined.
• Any Chapter 7 or Chapter 13 bankruptcy petition filed in the last 180 days must have been dismissed.
• In the past eight years or six years, you have not filed a Chapter 7 or Chapter 13.

What Are the Benefits of Chapter 7 Bankruptcy?

1. Major Financial Help

The main advantage of Chapter 7 bankruptcy is the elimination of all unsecured obligations, such as utility, medical, and credit card payments, and personal loans. The best thing is that debt relief is unlimited, meaning bankruptcy can dismiss hundreds of thousands of dollars due.

2. Auto-stay

A lender can’t seize or foreclose on your property during a Chapter 7 bankruptcy. This temporary option allows you to catch up on payments or find an alternative.

3. Debt Collector Protection

The automatic stay protects you against creditors who may have previously harassed you for 

debt collection. If you entirely discharge a debt, you have permanent protection. On the contrary, you may obtain a partial discharge and a time extension.

4. Garnishment of Wages

If you file for bankruptcy, no creditor may garnish your wages. This money can be used to cover monthly expenses.

5. Exemptions

Chapter 7 permits you to keep assets like a home, a car, clothing, furniture, etc. To live comfortably, you can maintain other assets worth less than a specific amount (typically $10,000 or less).

6. Fresh Start in Months

It takes 3-6 months for Chapter 7 to work and you will get your fresh start. As opposed to a Chapter 13, where you need to finish a 5-year debt repayment plan.

What are the Disadvantages of Chapter 7 Bankruptcy?

1. Chapter 7 is not available to individuals or businesses who earn more than a certain amount. 

Your bankruptcy will be amended to Chapter 13, which includes either partial or complete debt relief.

2. Bad Credit

Credit scores will drop regardless of bankruptcy type and will be on record for 7-10 years. You may still get fresh credit or loans if you qualify. 

3. Asset Disposal

Non-exempt assets, such as expensive autos, real estate, and collectibles will be liquidated to satisfy creditors.

4. Harmful Publicity

When you declare bankruptcy, your financial situation is made public. Anyone can look up the bankruptcy, but few do.

5. Debts not dischargeable

Mortgages, student loans, and auto loans are not dischargeable under Chapter 7. Also, bankruptcy does not relieve financial obligations like child support, alimony, and taxes.

What Type of Bankruptcy Is Chapter 13?

Chapter 13 is sometimes called reorganization bankruptcy because, under this type of bankruptcy, you may be able to keep certain assets by agreeing to make regular payments on them for three to five years. If you cannot make these payments, then the property may be sold or liquidated to satisfy any remaining liabilities. 

You’ll need the help of a competent bankruptcy attorney when preparing and submitting this type of petition with the court. An attorney can help determine whether Chapter 13 is right for you.

How Do I Meet the Criteria for Chapter 13?

To be eligible for Chapter 13 relief, a debtor must meet the following criteria:

• The debtor may be an individual or a married couple. Corporations, limited liability companies, partnerships, and business trusts are not eligible for Chapter 13 relief.
• The debtor must have “regular income,” which encompasses job revenue (i.e., working for a pay check), business income, renting income, and government help or benefits.
• Monthly net income must exceed monthly cost of living, leaving money each month to pay the Chapter 13 Trustee.
• Secured debt, which includes mortgages, tax liens, and auto loans, cannot exceed $1,149,525.00, while unsecured debt, including credit cards and medical bills, cannot exceed $383,175.00. These figures are revised every three years.

What are the Benefits of Chapter 13 Bankruptcy?

• Maintain ownership of all property – As long as you comply with the terms of your repayment plan.
• While debt is not eliminated, it is greatly reduced.
• Complete protection from creditors – This includes wage garnishment and debt collection.
• Classification of debts – Define the difference between debts incurred with a third party and those incurred with oneself.
• Dischargeable debts – Debt incurred due to fraud or purchases of luxury items purchased using a credit card.
• Protection for cosigners – If the payment plan is for the full amount of the obligation, your cosigners are protected from creditors.
• Unfathomable Future Chapter 13 petitions – At any point, you may file a later Chapter 13 petition.
• The lender protects the borrower against foreclosure.
• Increased time to repay non-dischargeable debts.

What are the Disadvantages of Chapter 13 Bankruptcy?

• Consumption should be kept to a minimum until your payment plan is complete.
• Expenses for legal counsel increased due to the more complicated bankruptcy process.
• Between three and five years is the requirement to repay debt.
• Brokers of stocks and commodities are prohibited from filing for this type of bankruptcy.

Key Takeaways

Although Chapter 7 bankruptcy is usually what people want to file because it’s the fastest, filing it still has consequences. You will be prevented from filing again in the next six years, and you cannot get new credit without a cosigner or an agreement with your creditors to repay them. 

It is important to consult an experienced bankruptcy lawyer in Georgia.  At the Law Office of Jeffrey B. Kelly (Kelly Can Help), you will be guided on the best way to proceed with your bankruptcy so you can get on your journey to a financial fresh start. Take advantage of our free case evaluation now.

September 16, 2020 / Jeffrey Kelly

Do you remember where you were when you first realized that Covid-19 was going to alter the course of your entire life?  I remember the restaurant.  I remember the smells.  I remember the family members that were sitting with  me.

March 2020 was the strangest month of my life.  How do you really prepare for a national shutdown?  Do you remember the empty shelves at the grocery store?  This past six months have seemed like such a strange bad dream.

What do we do now?  Lay down and give up?  You can’t.  People are depending on you.  We have to move forward.  For many people in this country, bankruptcy is going to be a good tool to help bounce back.

After Covid-19 hit, over 40 million people in this country lost their jobs due the shutdowns.  While the stimulus money helped, lots of people still missed many months of mortgage payments and car payments.  The good news is that Chapter 13 can help people catch up on the past due payments.  Chapter 13 stops the foreclosure of your home.  Chapter 13 stops the repossession of your car.

This past week, NBC news reported that the unemployment rate has fallen back into the single digits for the first time since the pandemic began and that over 1.4 million jobs were added to the economy last month. Things seem to be heading in the right direction.

Georgia courts were shut down in March due to the pandemic.  In mid-September, they fully reopened.  I suspect that there is about to be a huge deluge of garnishment orders coming down the pipe.  Unfortunately, most people wait until the very last second to do anything about a garnishment.

Georgia garnishment law is brutal.  Once a creditor obtains a judgment against you, they can take 25 percent of your net paycheck.  The good news is that Chapter 13 can stop the garnishment as soon as we get a bankruptcy case number.

To illustrate how Chapter 13 and Chapter 7 can help people bounce back from Covid-19, I would like to tell a story about a young couple I recently spoke with.  To protect their privacy, I will alter some of the facts of the case.  This young couple has three children.  Before Covid-19 hit, they both worked full time jobs.  After the pandemic hit, their local daycare completely shut down.  In addition, their local elementary school also closed and moved everything online.  With no one to watch the kids, they decided in their particular situation, it would be best for the wife to quit her job because the husband was earning more.

About a year ago, they both realized that the minimum credit card payments they were making were slowly slipping out of their reach.  To their misfortune, they heard a debt settlement commercial on the radio that promised the moon and the sun.  They called the phone number, set up a payment plan and assumed all was well until the sheriff showed up.

A few weeks ago, to their horror and dismay, the local sheriff pulled up into their driveway while they were playing in the front yard and served them with a collection lawsuit.  At first, they thought that there must have been some kind of misunderstanding.  Then, they called the debt settlement company only to discover that most of the money they had paid out over the past year went to the fees of the debt settlement company (I hear the exact same story from clients all the time).  Furthermore, they learned that they debt settlement company had zero legal means to prevent the collection lawsuit.

In contrast, when a person is in an active Chapter 13 case, no one can file a lawsuit against you.  Creditors cannot call, garnish, or bother you while your case is live.  You get great protection from the bankruptcy court.

This young couple was extremely frustrated to learn that they had essentially wasted a year with the debt settlement company.  The good news is that we were able to get their house and cars protected with a solid Chapter 13 plan. Also, we were able to eliminate all of their credit card debt.

Chapter 13 helped this young couple and I believe it is going to help thousands of consumers in Georgia bounce back from Covid-19.

August 31, 2020 / Jeffrey Kelly

Why should student loans be dischargeable in bankruptcy?

I believe that it is past time to end the economic slavery of millions of citizens of our country and make student loans dischargeable in bankruptcy just like they were prior to 1998.  Can you imagine the nightmare of living with a $200,000 debt that just hangs over your head and increases with interest every single year?  For many Americans, this nightmare is their daily reality.   

Want to finance a house?  Want to finance a car?  How about getting a loan to start a new business?  When a dark cloud of student loan debt hangs over your head, moving forward economically is impossible.   

Prior to 1976, student loans could be discharged just like any other debt.  Over the years, restrictions were added.  The first restriction was that you had to wait 5 years after graduating before you could discharge student loans. Then, the goal line was changed to 7 years.  In 1998, the hammer was completely put down and student loans could virtually no longer be dischargeable in bankruptcy as a result. For a good summary of the history of student loans and bankruptcy, click here. 

The Consequences of Making Student Loans Nondischargeable in Bankruptcy 

Since 1998, the cost of a college education has more than doubled in real dollar terms.  When I went to college, the vast majority of college housing was extremely spartan.  Today, most college dorms look similar to a resort so that colleges can attract students, lure them into huge amounts of federally backed debt, and make millions.  Most colleges now have bloated bureaucracies due to the lack of real market forces.  The connection between the true economic value of a college education has been disconnected from the value that said education will produce because of the restriction on dischargeability in bankruptcy.

Many people have been sold on the idea that you cannot have a successful life unless you have a college degree. It is becoming an increasingly popular choice for many young adults to forego college completely because of the high risk that they will never be able to repay the loans.  As a result, someone who should go to college may never develop their full potential because of this artificially inflated price.

Currently, the federal government keeps footing the bill for unpaid student loans.  Colleges get their money from the federal government whether or not a student ever repays the loan.  Where is the incentive to keep costs down and connected to the reality of whether or not the loan will ever be repaid?

The argument for bankruptcy 

Many famous people in the history of the United States have filed bankruptcy and then gone on to do great things for the world.  Henry Ford’s first automobile company did not make it.  Can you imagine a world without Henry Ford?  Thank goodness he was able to file bankruptcy and recover.  What about Walt Disney?  Can you imagine a world with no Disney?  No Mickey Mouse?  No Disney world!  Thank goodness Walt Disney was able to file bankruptcy and recover.

Because of the current nondischargeability of student loans, many college students have never been able to recover their lives.  What a horrible shame!

How many marriages never took place, how many children were never born, how many houses where never built and how many businesses were never started because of the dark cloud of excessive balances on student loans?  Any answer to these questions is pure conjecture but I think it safe to say that if we could estimate it, the answer would be in the millions.  

Nerdwallet reports that 5.2 million student loans are currently in default.

Keeping these loans nondischargeable in bankruptcy does not result in them magically being reimbursed by the students who borrowed. 99 percent of these loans will still never get paid!   

Bankruptcy has made the United States the best country in history.  Giving people a second chance makes sense in so many ways. Remember: There but for the grace of God go you. 

Fear of Potential Bankruptcy Abuse 

Bankruptcy is not some magic button people press to make all their debts go away. To file bankruptcy, the debtor must submit documentation under oath to a court of law showing that they are in fact bankrupt.  People who attempt to abuse the system end up in jail.  The lawyers who work for the United States bankruptcy trustees take their jobs super seriously and they will zealously enforce the law. My point is that when someone can afford to pay their student loans, they should continue to pay their student loans even if the loans become dischargeable once again.  

In conclusion, our bankruptcy system should be allowed to determine who should and should not repay their student loans.

August 3, 2020 / Jeffrey Kelly

One of the few good things to come as a result of the Covid-19 pandemic is that you can now file bankruptcy without ever leaving your house.  You can even “attend” your court hearing via telephone now from the comfort and safety of your home.   

Before Covid-19 hit, you had to physically appear in one of our offices and a bankruptcy attorney had to see you physically sign the documents.  For many people who have to juggle busy work schedules and family schedules, it was difficult at times to physically get into the office.  Traffic delays used to wreak havoc on getting some of our sign appointments completed. 

Now, because of the shelter in place concerns, the Bankruptcy Court allows us to file your case without you ever having to come to one of our offices.  Here is how the process works:   

Step 1:  We conduct your free initial consultation with you by phone.  During this phone conference, we want to review all of your debts, lawsuits, assets, income and expenses with you.  Our goal is to get a feel for your entire situation.  At the end of this free consultation, we will clearly explain to you why Chapter 13 or Chapter 7 bankruptcy is or is not a good option for you.  Unlike many other bankruptcy law firms, you will be able to talk directly to a bankruptcy attorney who will closely analyze the specific facts of your case.  In addition, we will answer all of your questions.   

If you decide to move forward with either Chapter 13 or Chapter 7 bankruptcy, we will need you to give us your social security number and your birthdate so that we can pull a credit report for processing your bankruptcy petition.  If you have received any lawsuits or other bills you would like for us to include in your case, you can take a picture of the documents and email them to us.  if you have access to a scanner, it might be easier for you to send them to us that way.  

Step 2:  The sign appointment.  During this appointment, which will take about two hours on average, we will do a screen share with you so that you can go through each page of the bankruptcy petition to make sure it is absolutely perfect.  We will use a program called Docusign so that you can electronically sign the court required signature pages.  We can file your Chapter 13 or Chapter 7 bankruptcy case shortly after your sign appointment so that your court protection will begin immediately.  We will mail you a hard copy of the bankruptcy petition after your case is filed.  Then, we will need you to sign it with a pen and mail the documents back to us.    

Your Court hearing:  Until October 2020, all bankruptcy court hearings will be conducted virtually over the telephone.  This means you can currently “attend” your court hearing without ever leaving your house.  Normally, you have to appear physically in court for your 341 Meeting of Creditors.  Before Covid-19, you would have to wait in the security line, get scanned by the guards, and then go sit in a room full of people and wait for your name to get called.   

Personally, I am hoping that all of the changes that have been made to our bankruptcy system as a consequence of Covid-19 will become permanent.   

Call us today at 770-881-8449 for your free consultation with a bankruptcy attorney. 

Having an account with ndc.org will allow you to see every single proof of claim that has been filed in your bankruptcy case and it will also allow you to verify that your Chapter 13 payments are being received by the trustee. 

Years ago, I had a client whose employer took money of her paycheck but never sent it the trustee.  We caught the error and had to sue the employer to get the money paid.  Having an account with ndc.org allows you to catch stuff like this.   

A proof of claim is a form signed under oath with supporting documentation that a creditor must file in a bankruptcy case in order to get paid.  The proof of claim will tell the trustee the type of claim and the amount owed.  If a creditor fails to file before the deadline in your case, they won’t get paid anything. 

For example, let’s say you had a car repossessed a few years ago and owed the car creditor $10,000.00.  If they fail to file the proof of claim on time, you will not have to pay that $10,000.00.   

Let’s change up the facts a little bit.  Let’s say you owe the IRS $10,000 of tax debt that we cannot eliminate in bankruptcy.  If they don’t file a claim, we may want to file one on their behalf to make sure they get paid in your case.   

While it is rare, sometimes a creditor will accidentally file a claim in the wrong place.  In theory, if no one ever notices, a wrong claim could get paid and cost you a lot of money.  At my bankruptcy firm, we review every single claim filed in our client’s case.  At the same time, we also encourage all of my clients to open an account with ndc.org and double check as well. 

The fact that many bankruptcy claims get sold can create a lot of confusion for clients.  You may look online and see the name of claim holder that you have never heard of before.  If this happens, it is a good idea to call us so that we can pull the claim and make sure it is accurate. 

If an inaccurate claim is discovered, we will first contact the person that filed it and notify them of their error.  If the offending filer ignores us (which happens most of the time), we will then file an Objection to the Proof of Claim.  The debtor will need to attend the hearing with us to testify to the judge that the claim is bogus.   

Ndc.org states that you can open an account online in less than 5 minutes.  All you will need to set up your account is: 

1. Your full legal name. 

2. Your bankruptcy case number. 

3. The last 4 digits of your social security number. 

4. Your trustee’s name. 

5. A list of your creditors in your bankruptcy case. 

Benefits of setting up a NDC account: 

• Access your Chapter 13 bankruptcy information online. 
• Helpful answers to frequently asked questions. 
• A quick glance at the page may save you a call to your lawyer or trustee office. 
• Provides you the information you need to stay informed about your Chapter 13 bankruptcy case. 
• Keep yourself on track during your payment plan. 
• Ensure that you will have no surprises. 

In conclusion, if you are in a Chapter 13 right now, go get your account with ndc.org set up as soon as possible.

No one can incur any new debt in an active Chapter 13 case without permission from the Bankruptcy Court.  To obtain permission, a hearing must be set down and all creditors in the case must be notified of the debtor’s intent.  At the hearing, the trustee will have questions and may or may not oppose your request to purchase a new car.  Your bankruptcy attorney will present your case and then the Bankruptcy Judge will decide whether or not she wants to sign an order allowing it.  Typically, this process can take from 30-45 days.   

If you truly don’t have any alternative source of transportation and the proposed payment, interest rate, and amount to be incurred are reasonable, most Bankruptcy Courts will approve the purchase of your new automobile. 

If you are wanting to purchase a new car because you are just tired of your old one, you need to wait until the end of your case before purchasing another one. 

You must have an acceptable reason to purchase a new car in an active Chapter 13. 

“My old car won’t run anymore and I need a way to get back and forth to work” is a good reason.  “I just want a new car because I’m tired of my old one” is a bad reason.   

If you have an extra car listed in your bankruptcy case, a trustee is going to ask why you need a new one.  If all of the cars have broken down since your bankruptcy case was filed, it is a good idea to amend schedule B of your bankruptcy petition to reflect the current status of old vehicles.   

The Myth of the Buy-Here Pay Here 

If a “buy-here-pay-here” car lot tells you that they don’t care about court permission and that they will gladly sell you a car, they are wrong.  You must have court permission to obtain new consumer debt.  It does not matter that the buy-here pay-here auto lot does not report on your credit.  If you violate this rule, your bankruptcy case could be dismissed or in a worst-case scenario, you could be sanctioned by the Bankruptcy Court.   

What do you do if you cannot obtain financing or if the Bankruptcy Court says no? 

If you are in a situation where no one will finance because you are in an active Chapter 13 case and you desperately need a new vehicle, what do you do?  The answer is that you can voluntarily dismiss your Chapter 13 bankruptcy case.   As a general rule, this is a terrible idea because you lose all of your bankruptcy protections as soon as your case is dismissed.  Garnishments, foreclosures and other collection activities can restart.  However, some people absolutely must have new transportation or else they lose their jobs.  In a best case scenario, the creditors will leave you alone long enough to buy another car and then you can refile later if everyone comes piling down upon you again.   

The bottom line is that if your car is about to give out and you are in an active case, call your bankruptcy attorney as soon as you can.  

The number one way that an ex can cause problems in a Chapter 13 bankruptcy case is when they have cosigned on a car with you.  In most Chapter 13 bankruptcy cases, we are able to lower interest rates on automobile debt down to 6 percent.  This feature of Chapter 13 is particularly wonderful when you have interest rate of 30 percent and we are knocking it down to 6 percent.  What a relief, right!  All this can go out the window if you have an ex that was involved in the purchase of your car. 

If an ex is cosigned on the car with you, this becomes super problematic.  If we try to lower the contract interest, the creditor be able to sue the ex for eliminated portion of the debt.  As you can imagine, they will scream and holler up to the hilltops.  To protect any cosigner from being pursued by a creditor, we can take advantage of the cosigner protection of the Bankruptcy Code as long as we pay the full contract amount in the Chapter 13 plan.  Paying cosigned interest of 30 percent in a Chapter 13 plan can sometimes make it impossible.  Another option in some cases is to surrender the car to the creditor and let the ex deal with all of the fallout.

It does not matter who signed first or second on the car note.  If two people signed it, then two people can be pursued for 100 percent of the debt. 

A second way that an ex can sneak up on you in a Chapter 13 is income taxes.  When you sign a joint tax return, you are jointly liable for the taxes.  The most common case of this happening is when the ex is self employed and has some shady tax preparer (not a CPA) file the tax returns. 

I have seen Chapter 13 cases where we get the case filed and the client has a reasonable monthly payment.  Then, a few months after the case is filed, the Internal Revenue Service swoops down from nowhere and files a claim for $100,000.00.  This could potentially increase the client’s Chapter 13 payment by an extra 1783 per month.

How can you avoid these nightmare ex from hell scenarios?  The answer is to never sign a joint tax return and never cosign for any person’s car and never ask anyone to cosign for you.  When the car salesman says, “all you need to do is get your boyfriend/girlfriend to sign with you and we have  a deal” run away.  Run away!  As fast as you can, run away!

If you have any questions about Chapter 13 or Chapter 7 bankruptcy, please give us a call at 770-637-1756.  If you get a chance, please check out my youtube videos and my podcasts.