Considering Bankruptcy?

Considering Bankruptcy In Georgia? Here Are A Few Things You Should Know

Georgia Bankruptcy Rules

While bankruptcy can reduce or even completely eliminate a debtor’s financial obligations, there are some preliminary requirements individuals and businesses should be aware of before filing. Before a debtor can file, they must undergo credit counseling, but counseling is only a start. There are other qualifications debtors must pass in order to be allowed to file for bankruptcy protection in Georgia.

Credit Counseling Requirements

Before filing for bankruptcy in Georgia, a debtor must undergo credit counseling from a government-approved organization. The Department of Justice’s U.S. Trustee Program will approve the organization or reject it. The purpose of the credit counseling is to ensure the Bankruptcy Court that the debtor is fully aware of their options and does not make a hasty decision.

The counseling session and certification is a prerequisite for filing, which must be fully completed before the individual can seek bankruptcy protection. During the session, the debtor’s finances will be evaluated and a budget plan will be created for their individual needs. There is a small fee for the counseling session, which is about between $35 and $50, however there are cases in which a fee waiver from the credit counseling organization can be issued.

Who Can File For Bankruptcy Protection In Georgia?

Individuals, corporations, partnerships, and municipalities can file  bankruptcy petitions in the federal courts in Georgia. The most commonly filed chapter under the Bankruptcy Code is a Chapter 7 liquidation.  A Chapter 7 bankruptcy petition is known as liquidation bankruptcy because the filer’s unsecured debts are wiped out after a Chapter 7 Trustee administers any non- exempt property for the benefit of creditors.  Georgia bankruptcy lawyer Theodore N. Stapleton can help you determine the validity and extent of your exemptions.

Debtors in Georgia can file for Chapter 7 only if they have not received a discharge in a previously filed Chapter 7 case within the past eight years. Those individuals seeking to file a chapter 7 liquidation bankruptcy case in Georgia must be a resident of the district in Georgia in which they file for the majority of the 180 days days prior to filing.

Passing The Means Test

If all the other requirements are met by the debtor, then the bankruptcy court will ask the debtor basic questions about their income in order to determine whether or not they have the means to pay their debt. The court uses a formula called the “means test” to compare the debtor’s income to the median income in Georgia. If the debtor’s income is below the median, having less than $100 of disposable income left over each month after paying bills, then the debtor qualifies to file for Chapter 7 bankruptcy. The median income category for each debtor is determined by their family size and number of earners in the family. As an experienced Georgia bankruptcy attorney, Theodore N. Stapleton can help debtors determine whether they can pass the means test or not and will determine alternative options if they do not, such as Chapter 13 reorganization bankruptcy.

Chapter 13 Bankruptcy Prerequisites In Georgia

Debtors who do not qualify for Chapter 7 liquidation bankruptcy in Georgia may qualify for Chapter 13 reorganization. This chapter is easier to qualify for because debts will not be completely discharged. Instead, the debtor will be placed on a payment plan so they can repay what they owe to lenders over a period of three to five years. Generally, if debtors have over $336,900 in unsecured debt as of 2010, they will not be able to file for Chapter 13 reorganization bankruptcy. The same applies to secured debt exceeding $1,010,650.