Filing for bankruptcy in Georgia is an option if you have more debts than assets and know that you do not have the means to repay creditors according to your agreements with them. However, you must meet certain qualifications for both Chapter 7 and Chapter 13 bankruptcy.

What is Chapter 7 Bankruptcy, and How Do You Qualify?

Chapter 7 bankruptcy eliminates most personal debt such as credit cards, installment loans, and medical bills. You should be aware that federal law does not allow you to claim certain debts in your bankruptcy petition, such as past-due child support or overdue taxes. You will need to pass Georgia’s means test before you can proceed with filing for Chapter 7 bankruptcy. Each state sets income limits based on the cost of living and the average income of residents.filing bankruptcy checklist

If you are single, you cannot file for Chapter 7 bankruptcy if you earn more than $53,105 per year as of 2021. The amount increases progressively for each additional family member up to a maximum of $116,185 for a 10-person household. Your income must be lower than the median state income for the same family size.

Georgia also allows Chapter 7 bankruptcy petitioners to claim several exemptions that do not count towards asset limits. These include:

  • Homestead: You can protect up to $21,500 in real property if single or $43,000 if married.
  • Motor vehicle: This exemption is $5,000 for single people and $10,000 for married couples.
  • Wildcard: This term refers to miscellaneous assets you want to protect up to $1,200 if single or $2,400 if married. You can also claim up to $10,000 of any unused homestead exemption if single or $20,000 if married.

Once you have qualified and determined your exemptions, you will need to gather and prepare a significant amount of paperwork and return it to your attorney. Examples include pay stubs, list of creditors, list of assets, bank statements, and tax returns for the past two to three years. You will also complete a federal and state application for bankruptcy at that time.

The next step after qualifying for Chapter 7 bankruptcy and submitting your paperwork is to attend a credit counseling class. Your bankruptcy attorney will provide you with a list of approved credit counselors in Georgia. You will need to pay a small fee to complete the two-hour course. Your certificate of completion for the credit counseling course is good for six months.

You are now at the point of paying your bankruptcy filing fee. The amount is $338 as of 2021, but you may qualify for a fee waiver if your household income is 150 percent of the poverty guidelines at the household level. Your bankruptcy attorney will provide guidance on how to pay your fee and file your bankruptcy documents with the local court.

You will need to take a second credit management course and attend a 341 creditor’s meeting. Although creditors can attend this meeting and ask you questions, this usually does not happen, and the meeting is over within a few minutes. Be sure to bring photo identification to the 341 meeting.

Qualifying for Chapter 13 Bankruptcy in Georgia

You can consider filing for Chapter 13 bankruptcy if your income is higher than the state median or you have too many assets to qualify for Chapter 7. Chapter 13 bankruptcy restructures your debts to make them easier for you to pay over the course of three to five years.

Some debtors voluntarily choose to file for Chapter 13 bankruptcy over Chapter 7 because they want to maintain more of their assets. With Chapter 7 bankruptcy, you may need to sell some of your assets and give the proceeds to your creditors. Other common reasons that Georgians select Chapter 13 bankruptcy include:

  • Bring past due mortgage or car payments current
  • Keep more non-exempt property and other assets
  • Pay back taxes and/or stop interest from accruing on overdue taxes
  • Prevent foreclosure on their home

A bankruptcy trustee must approve your repayment plan before you can officially file for Chapter 13 bankruptcy. The amount you must repay depends on factors such as your disposable income. A bankruptcy trustee would dismiss any remaining debt at the end of your payment plan if you made all payments on time.

Clark & Washington, PC offers free bankruptcy consultations. Please contact us to schedule yours today.