Chapter 7 Bankruptcy Georgia: 3 Things You Need to Know

Not knowing what route to take can be highly challenging if you're faced with debt. Therefore, we've written this guide to determine Chapter 7 bankruptcy in Georgia and possible alternatives. Before continuing to read, however, we have a few points we'd like to share:
Information in this article does not constitute legal advice, it is for informational purposes only, and may not constitute the most up-to-date information. Readers should contact their attorney for advice on any particular legal matter.

When it comes to filing Chapter 7 Bankruptcy in Georgia, it can be helpful to consider three things: 

  1. Do you know if you're eligible to qualify for Chapter 7 bankruptcy? And if so, how much do you think it would cost?
  2. What alternatives exist to bankruptcy, and could any better fit your situation?
  3. Are there any specifics about filing in Georgia that are unique to the state?

We'll answer those questions and provide more resources in the following article. However, we also understand if you want to get straight to the point. If so, use our calculator below—it will estimate your eligibility and possible filing fee.

1) How Chapter 7 Bankruptcy Works in Georgia

How Fast Do You Get Relief in A Chapter 7 Bankruptcy in Georgia

It usually takes around 120 days to wrap up a no-asset Chapter 7 case in the state from start to finish. A "no-asset" bankruptcy generally means you don't own fancy houses or other valuable assets that might exceed the Georgia bankruptcy exemptions. So, if you're in a situation where you don't have an excess of income, you could be looking at a relatively speedy resolution to your bankruptcy case.

How Much Does It Cost To File Chapter 7 Bankruptcy in Georgia

Nationally, Chapter 7 bankruptcy usually costs between $500 and $3,000. A few significant factors determine this fee—geography, lawyer expertise, and the complexity of your case.

Even in Georgia, the fee may drastically change from one area to another. For instance, in Milledgeville, it usually hovers around $500. Whereas in Rome, it could be closer to $2,122.

That said, knowing it's the filing fee waiver is also essential. If qualified, you might be eligible for a reduced bankruptcy fee. We encourage you to check out the following resource to learn more: Georgia filing fee waiver.

How Do I Qualify For Chapter 7 Bankruptcy in Georgia?

When reviewing whether you qualify for Chapter 7, you may want to check the Chapter 7 Bankruptcy Georgia Income Limits. This test determines eligibility for Chapter 7 bankruptcy. If you pass the means test (you can estimate it below), Chapter 7 should be able to cover most of your unsecured debts. Unsecured debts don't have any collateral and don't include medical bills, personal loans, certain old income tax debts, old utility bills, credit card debts, and most personal judgments.

What about secured debts in Chapter 7?

If you want to wipe out secured debts such as car loans and mortgages, Chapter 7 bankruptcy might still be the answer. But the catch is that you'll have to give up to the creditor, who will consider its total payment for what you owe.

IMPORTANT: Chapter 7 Qualification via Georgia Means Test

A tool to help you determine your eligibility for Chapter 7 bankruptcy in Georgia is the Bankruptcy Means Test. This form will help calculate your average annual income based on your last six months of gross income. It will then compare that number to the median income of other households in Georgia. If your median income turns out to be below the Georgia median income, you might qualify for a Chapter 7 bankruptcy discharge.

Feel free to use the calculator below

My Income Exceeded The Chapter 7 Means Test Allowable in Georgia

If your income is higher than the median income in your state, you might need to dive into part 2 of the means test or explore an alternative option. We encourage you to check out this helpful resource: passing the Chapter 7 means test when income exceeds the median.

Chapter 7 Bankruptcy Georgia Income Limits

If you're filing for bankruptcy in Georgia on or after November 1, 2023, here are the limitations for income based on household size:

Will I lose my belongings if I file Chapter 7 bankruptcy? Understand Georgia bankruptcy exemptions.

Bankruptcy exemptions help protect your assets from being seized by creditors. Therefore, it's essential to understand the limitations in Georgia.

For the most critical exemption, the home equity exemption, Georgia offers up to $21,500 of protection. This amount increases to $43,000 if you file jointly with your spouse.

Another significant exemption to be aware of is the motor vehicle exemption. This will protect up to $5,000 of motor vehicle equity in Georgia.

Lastly, there are significant exemptions when it comes to tax-exemption retirement accounts. These amount to a total of $1,512,350 for any one person.

Nonetheless, there are a lot of small exemptions that you could apply to your situation. You must conduct the necessary research to maximize your savings in the case of bankruptcy.

Chapter 7 Bankruptcy Georgia Pros and Cons

Pros

  • The speed at which you can receive a discharge: In just about 120 days, you could be debt-free and on your way to building a fresh start.
  • Property exemptions: If you meet the threshold for exemptions, filing for Chapter 7 bankruptcy may allow you to keep a good percentage of your personal property.
  • Stopping debt collection lawsuits: Once you file, the court will issue an automatic stay, preventing legal action against you, including calls and letters from collectors.
  • Loan deficiency: When you owe more on a loan than the collateral is worth, you may be stuck with a deficiency. But with bankruptcy, that burden could be lifted.

Cons

  • Income requirements for qualification: To be eligible for Chapter 7 bankruptcy, you must meet specific income requirements.
  • Potential loss of home and belongings: If your assets exceed the exemption limit, there is a chance that you may have to part ways with some of your property.
  • Negative impact on credit report: Filing for Chapter 7 bankruptcy can have a lasting effect on your credit report. It stays on record for a decade, challenging securing future loans or favorable interest rates.
  • Non-dischargeable debt: It's essential to note that all debts may be discharged through Chapter 7 bankruptcy. Specific obligations, such as student loans and child support payments, are typically not eligible for discharge.

2) Alternatives to Chapter 7 Bankruptcy in Georgia

a) Chapter 13 Bankruptcy in Georgia

If you earn more than the income limit for Chapter 7 bankruptcy, there's still a way to get relief through Chapter 13 bankruptcy. A Chapter 13 Bankruptcy in Georgia allows you to restructure your debts into a more manageable monthly plan. This restructuring can help you keep your home and vehicles, help stop foreclosure, and prevent repossession of your belongings. Furthermore, you might be able to reduce any unpaid child support, alimony, and car loan payments.

Can you afford Chapter 13 bankruptcy?

If you are considering a Chapter 13 bankruptcy, you can use this calculator to help estimate whether you can manage the monthly payment.

b) Debt Settlement/Relief

Debt settlement may also be another option aside from Chapter 7 and Chapter 13 bankruptcy. Once you pursue this option, the debt settlement company negotiates a lower amount on your total debt, saving you money in the long run. However, consider its impact on your credit score and research correctly to choose a well-reputable and transparent debt settlement company.

c) Debt Management

Another option is debt management. Whereas debt settlement companies work to lower the total amount of debt you owe, debt management companies work to lower your interest rates. These programs usually last 3 to 5 years and are pricier than debt settlement. Not all creditors may be willing to work with a debt management company.

However, if you're dealing with an interest credit card debt, this option may reduce that interest by around 10-20%. This could translate to an eventual 30-50% savings on the debt you currently owe and allow you to pay off these debts more efficiently. Considering your situation and determining which option makes the most sense financially is essential.

d) Debt Payoff Planning

The last alternative we'll mention is Debt Payoff Planning. This strategy does take some effort and will require you to cut your expenses and save excess income to pay down as much debt as possible. However, you can make tangible progress every month by choosing the appropriate debt payoff plan. Another thing to remember is that as you begin to pay off your debts, you will be able to compound those payments towards the remaining debts, allowing you to pay things off faster and faster.

Conclusion

After reading this article, we hope you feel more confident and informed about options to deal with your debt. As mentioned, we have created a calculator to help estimate your qualifications and eligibility. If you're interested, you can get started on it below.

If you are still uncertain about the actual process of filing bankruptcy, we have written a more in-depth article about that topic as well.

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