Decatur Bankruptcy Attorney
If you are considering filing for bankruptcy, there are many reasons you should consider hiring a bankruptcy attorney. Declaring bankruptcy is not something anyone plans for themselves, but sometimes, it is a necessary course of action. Hiring a bankruptcy attorney can ensure you are making the best decision and guide you through the process.
Reasons to File for Bankruptcy
Filing for bankruptcy is not an easy decision to make. If your debt is piling up with no means of relief in the future, chances are, the calls and letters from collection agencies and creditors have become part of your daily life. Declaring bankruptcy has the immediate benefit of being granted an ‘automatic stay’. What that means is that creditors are no longer allowed to send you letters, call you, and stop trying to collect their money from you. They are prohibited from filing lawsuits against you and garnishing your wages or seizing your assets. There can be an exception to the latter when alimony/child support is an issue. When weighing the benefits and negatives of filing for bankruptcy, be sure to consult an expert bankruptcy attorney who can explain state laws, as well as the pros and cons of your specific case.
Bankruptcy Types: Chapter 7 and Chapter 13
Chapter 7 Bankruptcy
Filing a Chapter 7 bankruptcy is the most severe option and can take up to four-to-six months to complete. This is a liquidation plan where creditors and lenders are paid off by the bulk of your personal assets being sold off. To file for Chapter 7 bankruptcy, there is a ‘means’ test you will need to pass. To qualify, your income will have to be below or equal to your state’s median income. A further condition of qualifying involves having to complete a credit counseling course.
The process involves your request to the court to discharge the majority of your owed debts. In exchange, a court-appointed trustee will liquidate the majority of your assets. These assets will include any that are not discharged from collection: clothing, pensions, portions of real estate, and family heirlooms.
There are some debts that cannot be discharged. Mortgages, car loans, child support/alimony, and certain taxes make up this category. Also, federal student loans can only be discharged if you can prove that making that loan payment would leave you in financial dire straits; this, however, is a very challenging thing to prove. If any of your loans have been co-signed, creditors are still allowed to contact the co-signer for payment, so you will want to apprise them of the situation.
The Chapter 7 Bankruptcy Process
To initiate the process, you will have paperwork to fill out providing lists of your income, assets, and total debts. If everything is not included in your list, it can be missed when it comes time to erase everything, and it can also be considered a fraudulent act.
Next, you will need to pay a fee to file a petition for bankruptcy court and a date will be chosen. The petition immediately prevents creditors from suing you or garnishing your wages. Your creditors will be notified of your status, and you will be assigned a court-appointed trustee to guide the process.
Generally, a month after you have filed, there will be a hearing where creditors can view your debt. The trustee will arrange the liquidation of your non-exempt items. After that is completed, you will be exempt from paying a dischargeable debt, including unpaid rent, service bills, credit cards, medical bills, and personal loans from friends and family. It is illegal for creditors to try and collect from the original debt. If there are some non-dischargeable debts still in existence and creditors consider them fraudulent, collection agencies can still contact you.
The petition forms a distinct taxable bankruptcy estate made up of all assets you owned prior to filing. Your trustee will prepare and file taxes connected to the estate, but you are responsible for income tax (taxes that are not connected). A Chapter 7 bankruptcy will remain on your credit record for 10 years.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a debt-repayment plan in which you consent to pay back a percentage of your debt. The percentage is calculated based on your debt amount and current income. People choose this option when they want to keep their home if they have consistent income, and if their unsecured debt is less than $395,000 and secured debt is below $1,184,200.
As long as you continue to make payments, you do not have to liquidate your assets. Chapter 13 protects you from foreclosure, and it is illegal for creditors to garnish your wages or for collections to come after you.
You can also separate your debts whereby different portions of payment go to each individual creditor. If you make arrangements to fully pay back your debt load, creditors are also not permitted to go after any co-signers you have.
Unlike the brevity Chapter 7, the Chapter 13 process can take from three-to-five years to complete. Chapter 13 remains on your credit record for seven years.
The Chapter 13 Bankruptcy Process
You will be required to make one monthly payment to your trustee, and they will distribute the funds to the creditors. They will be paid on a priority basis: taxes, child support and alimony, and administration costs. Lenders are next to be paid, then credit card companies, medical bills, and utilities.
You will fill out the same paperwork as in Chapter 7, pay the fee to petition the court, and be appointed a trustee by the court. You will then submit a plan for repayment, and the court can accept or reject your proposal. After you have completed your form listing all your assets and income, plus have a confirmation hearing scheduled, your trustee will start paying your creditors. Your debts will be paid from your income, and if there are remaining debts after your bankruptcy is complete, you have to continue paying off those debts. There is no distinct taxable estate formed by the petition as in Chapter 7, and you will keep paying taxes like you did prior to filing.
At Cornwell Bankruptcy, our law firm specializes in current bankruptcy laws in the state of Georgia. I have the necessary experience and knowledge to guide and advise you on the best bankruptcy option for you. Whether it is Chapter 7 or Chapter 13, foreclosure, or any other options, my clients have been completely satisfied with their results. Give us a call today for your free consultation with a Decatur bankruptcy attorney.