Filing for Chapter 7 Bankruptcy in Atlanta

Chapter 7 is the most prevalent type of bankruptcy in all of Georgia. It legally allows you to free yourself from common types of debts like credit card, medical bills, and other unsecured debts. This also includes deficiencies, personal guarantees, mortgage, and foreclosure. In addition, any interest that was not yet paid on those debts will be considered as canceled.

Chapter 7 Exemptions

As a person filing for bankruptcy, Chapter 7 requires you to surrender all your assets in exchange of being set free from your financial debts. On the other hand, you can claim exemptions so your house and vehicle will not be taken away from you. Exemptions are assets that your creditors can’t take in times of legal bankruptcy. You have to consult a lawyer about such exemptions since these may be different based on state or federal law.

When you file for bankruptcy under Chapter 7, it does not necessarily mean that you can keep your assets free of charge. A lien against property like a house or car makes you liable to pay the lender. Hence, lawyers normally advise their clients to catch up on delayed payments first before applying for Chapter 7 bankruptcy. Otherwise, your better option will be Chapter 13.

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What is Chapter 7 Bankruptcy?

Under the United States Code Title 11, the government allows some debtors permanent relief from most – if not all of their – debt. If you are not able to keep paying your minimum payments, mortgage, car loans, or make regular payments to other loans, filing for Chapter 7 bankruptcy might be a good financial move for you. For some consumers, this is the best way to get out from under the debt that will seemingly follow them around forever.

This type of bankruptcy is also referred to as a straight bankruptcy or liquidation bankruptcy. During this legal process, Chapter 7 debtors are assigned to a trustee. The court-appointed trustee can take the debtor’s assets, sell them, and then use the funds to pay creditors who file proper claims. That said, a debtor is allowed to exempt certain  property from their bankruptcy in order to help them get a fresh start.

Who is Right for Chapter 7?

Your financial situation is as unique as you are. Filing a Chapter 7 bankruptcy may or may not be the right answer to your financial problems. Scheduling a consultation with an experienced Atlanta bankruptcy attorney is the best way to determine if this is the right move for you. Here are a few factors to consider:

Could a creditor sue you for the money you owe them and be able to garnish your wages, levy your bank accounts, or place a lien on your property? If a creditor could take these steps to get the money you owe them, a Chapter 7 bankruptcy might be a good idea for you.

In some bankruptcy cases, debtors are able to keep all the property they own. In other cases, they must give up valuable or sentimental property in order to file. Discussing this with a bankruptcy attorney will be crucial before making your decision to file.

If all or most of your debts will be erased with a bankruptcy filing and discharged, it makes sense to go this route. However, if you have a lot of debt that is ineligible for a bankruptcy discharge, meaning you will still owe the debt after you file bankruptcy, it may not be worth filing.

Debts that will likely not receive a discharge in a bankruptcy case include student loans, taxes and penalties, debts incurred through willful or reckless acts, credit card debt that was incurred within the 90 days prior to the bankruptcy filing, and debts related to the nonpayment of child support or alimony.

Benefits of filing

The benefits of filing for bankruptcy are many. First, you receive immediate relief from any creditor collection activity as a result of an injunction known as the automatic stay. The endless phone calls to your work and your personal phone will stop, and creditors are not allowed to take any legal action against you, such as wage garnishment, foreclosure, repossession, and filing lawsuits. If a creditor does call, simply inform them that you have filed for Chapter 7 bankruptcy and provide them with your case number.  If a creditor continues to call or keeps trying to collect the debt, the court fine them.

Other benefits of filing for bankruptcy include:

  • Debts such as medical bills, credit cards, personal loans, lawsuit judgments, cell phone bills, and utility bills are erased
  • If your credit score is poor, you will likely see it improve significantly after your bankruptcy discharge and can continue to take steps to improve it
  • Wage garnishments will stop
  • Any foreclosure actions will stop (although if you cannot get caught up on your mortgage or work something out with your lender, they will commence once your bankruptcy is over)
  • You may have more options for banking and credit after your bankruptcy discharge


When you file for bankruptcy, all of your property (excluding most pensions and educational trust funds) are a part of the bankruptcy estate. This included property you own or have loaned to someone, property you recently gave away, property you receive within 180 post-filing, and proceeds from your property.

Federal and state laws address the value or amount of property you are able to exempt in your filing. Some states allow you to choose to go by the federal or state exemptions while others only use their state exemptions. Georgia falls under the latter category and has the following exemptions under Georgia Code § 44-13-100:

  • $21,500 in real estate or personal property, $43,000 if married and only one spouse owns the property, up to $10,000 can be used on another property in some circumstances
  • $5,000 for motor vehicles
  • $500 in jewelry
  • $5,000 in household goods, musical instruments, animals, clothing, appliances, books, crops, and animals
  • Health aids
  • $7,500 in compensation for future earnings necessary for living
  • $10,000 in personal injury recoveries
  • Recoveries for wrongful death necessary for living
  • Alimony and child support
  • Public benefits such as social security, crime victims compensation, unemployment benefits, and worker’s compensation
  • 75 percent or 40 times the state or federal hourly minimum wage (whichever is greater) of disposable wages earned but unpaid
  • $1,500 in tools of the trade
  • $1,200 wildcard
  • Some pensions and retirement accounts such as IRAs and ERISA-qualified benefits
  • Some insurance proceeds such as group life insurance and unmatured life insurance contracts

With so many exemptions and variables, it is essential that potential bankruptcy filers consult with an Atlanta bankruptcy lawyer to ensure that they are not only following the law but claiming the maximum amount of exemptions allowed by Georgia bankruptcy law.

How Much Does a Chapter 7 Cost?

Federal laws determine the filing fees for bankruptcy. Debtors who file for Chapter 7 bankruptcy must pay a filing fee to the court of $335, in addition to legal fees paid to their bankruptcy lawyer in Atlanta. The filing fee does not change if you use an attorney and in some cases, can be paid in installments. For some people who want to file and qualify for Chapter 7, not paying a month worth of credit card bills allows them to pay their filing fee and some or all of their attorney fees.

Chapter 7 is Inexpensive, But You Have to Pass a Means Test

Chapter 7 typically is the better option and also the least expensive type of bankruptcy to file. However, not all people are qualified to file for Chapter 7. Your income must be below median income for the size of your household in order to pass the test. The only exception is when your business has a substantial amount of debts. If you don’t pass the test and when your income is higher than the median income, you will be forced to file for Chapter 13.

The test will start with the computation of your average gross income for the last 6 months before you filed your bankruptcy application. However, this is entirely different from income tax purposes. Necessities such as rent, transportation and utilities expenses will not be deducted. IRS collection standard deductions are used instead of your actual expenses. Whatever amount is left after the allowable expense deductions will be your disposable income.

Chapter 7 Means Test

Unfortunately, not every debtor will qualify to file a Chapter 7 bankruptcy. The law requires your household income to be below the median for your household size to be eligible for a Chapter 7 bankruptcy filing, also known as passing the means test. Unless you own a business with substantial debt, you cannot file a Chapter 7 if you do not pass the means test. You can, however, file a Chapter 13 bankruptcy instead.

The means test takes into account your average gross income over the past six months prior to your Chapter 7 application filing. Unlike income taxes, it does not allow you to deduct income used for living necessities such as rent, transportation, and utilities. Instead, the IRS collection standard deduction applies. Your disposable income is your average gross income minus the standard deduction.

Chapter 7 Alternatives

Alternatives to filing a Chapter 7 bankruptcy differ depending on what your goals are. For instance, if you just want creditors to stop calling you, you can use federal debt collection laws and request them to stop. If you do not qualify for a Chapter 7 or have more property than exemptions that you want to keep, filing a Chapter 13 bankruptcy might be a better choice for you.  Other alternatives include:

  • Negotiating with your creditors
  • Using a credit counseling agency
  • If you are judgment-proof, doing nothing

How to File Chapter 7

If you are interested in filing a Chapter 7 bankruptcy, we want to help you.  Attorney Keith Cornwell will ask you several questions during your initial consultation. It is important that you give honest and accurate answers so that he will be able to give you proper legal advice about your financial situation. Remember that each person and every business entity is different. Attorney Cornwell will do his best to determine your eligibility for Chapter 7. Additional details may be required for you to pass the means test. It is helpful to have the following with you during your consultation:

  • Bank statements
  • Tax returns
  • Credit card statements
  • Rent or mortgage statements
  • Statements for other debts
  • Paystubs

Don’t be alarmed when our staff asks about your assets and debts. This is a normal part of the proceedings which help us to know and apply the types of exemptions that are available for you. You will also have to disclose information about the payments that you made to your creditors.

If you qualify to file a Chapter 7 bankruptcy and want to move forward with the process, our staff will prepare the filing documents for you. With your approval, we will file them and then help you through every step of this sometimes confusing process.

What to Expect

Many debtors need to file for bankruptcy protection as soon as possible to stop wage garnishments, foreclosures, or repossession of their vehicles. For other debtors, waiting to file for bankruptcy could be ideal. Your bankruptcy attorney in Atlanta can advise you as to what the best course of action is for your specific situation.

All bankruptcy filers are required to successfully complete a credit counseling program through an approved agency before filing. This must be done within six months prior to the filing but can often be done online. A fee applies to most programs; however, if you meet specific low-income requirements, your fee may be reduced or waived entirely.  Your bankruptcy lawyer in Atlanta can provide you with a list of court-approved programs.

Within about two weeks of your bankruptcy filing, you will receive notice of when your creditor’s meeting will be. Also known as a 341 meeting, this meeting requires your attendance, as well as your trustee’s attendance. Creditors are informed of when and where this meeting will be. They can come to object to the discharge of any debts you owe to them.  It is the job of the trustee to ensure that your creditors are paid as much as possible.

At this meeting, you will be sworn in and asked questions by the trustee about your financial situation and the forms you and your attorney completed. Your creditors are also allowed to ask questions. Many times, however, creditors do not show up at these meetings.

After your 341 meeting, your creditors and the trustee have 60 days to object to your bankruptcy discharge entirely or to the discharge of a specific debt. If they choose to do so, they are required to file a formal lawsuit within the bankruptcy court. If no one objects to your discharge, the court will issue the discharge order after the 60-day waiting period. You no longer owe your unsecured debts at this point, and your creditors are breaking the law if they attempt to collect them. For any unsecured debts such as a home or a car, you will need to reaffirm them and keep up the payments.

Our Services

Attorney J. Keith Cornwell and all of our staff know how stressful and time-consuming debt can be. We treat each one of our clients with compassion and respect as we know financial stress and burdens can be a sensitive topic for many. To us, you are an individual, not just a dollar amount of debt or another statistic. We want to fully understand your financial situation and goals so that we can offer the best solutions to your financial stress.

What you can expect from us:

  • Legal strategies that work
  • Real-time communication with a dedicated attorney
  • No more phone calls from debt collectors
  • Affordable solutions with flexible payment options
  • The fresh start that you deserve

A Knowledgeable Atlanta Bankruptcy Lawyer Can Help

From your initial consultation to your meeting of creditors, and all the way through your discharge, we are here every step of the way to help you. We want to answer your questions and help you feel at ease, no matter how much debt you have.

The process of determining what type of bankruptcy you are entitled to, the exemptions that you can avail, and if Chapter 13 is better suited for you is not easy.

Attorney Keith Cornwell of Cornwell Law Firm will ask you many questions during the initial consultation. Prepare your honest and accurate answers to the lawyers will be able to give you proper legal advice about your financial situation. Remember that each person and every business entity is different. Our attorney will try his best to determine your eligibility for Chapter 7. Additional details may be required for you to pass the means test.

Don’t be alarmed when the lawyers ask about your assets and debts. This is a normal part of the proceedings in order to know the types of exemptions that are available for you. You will also have to disclose information about the payments that you made to your creditors.

Atty. J. Keith Cornwell will explain every step of the bankruptcy process: the details that you need to disclose with the law firm, the things that you have to expect after filing for Chapter 7, the reasons why your creditors must stop asking for payment once you filed the petition, the things that will happen during the meeting with your creditors, the span of time that your debts will be discharged, the costs, and many more.

It is true that Chapter 7 bankruptcy gets rid of your debts. More importantly, it also relieves your stress and humiliation by dealing with your debts which are impossible to settle.

Let attorney Keith Cornwell discuss all your concerns via a free consultation.. Give us a call at (404) 791-4449 or fill out our contact form.

Cornwell Bankruptcy is an Atlanta-based bankruptcy law firm that specializes in debt relief and management. We are here to help people file for bankruptcy in accordance with the Bankruptcy Code.

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