Chapter 7 Bankruptcy

Chapter 7 Bankruptcy in Georgia.  Our lawyers and attorneys file Chapter 7 bankruptcy cases for residents of Dalton, Chatsworth, Ringgold, Calhoun, and all surrounding areas in Northwest, GA.  Chapter 7 is often referred to as “straight bankruptcy” “simple bankruptcy” or “fresh start bankruptcy.”  It is a straight forward case that typically lasts around 4 months from the filing date to the close of the case.  We help and prepare all the necessary paperwork to file a Chapter 7.  After filing, a “Trustee” is appointed to investigate your assets and debts and there is a short meeting with the Trustee during the case.  In most circumstances, you can discharge and eliminate unsecured debts, reaffirm (keep) secured debts on cars and houses, and keep all your regular property.  Every situation is unique, however, and we would need to review your situation to determine how a Chapter 7 would affect you.

Generally, there are three primary issues to consider when planning for a Chapter 7 bankruptcy.  Do you qualify? Do you have any property at risk in a bankruptcy? What will happens to the debts, especially secured debts?

Qualifying. The biggest barrier to filing Chapter 7 is the “Means Test.”  Congress passed the means test requirement in 2005 with the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA).  The purpose of the means test is to see if you have the ability, or the “means,” to repay some of your debt.  If you do, then the law may prevent you from filing Chapter 7 and instead lead you to Chapter 13.

The simplest way to qualify under the means test is to determine if your family income falls below the median for the state you live in.  In other words, you “should” pass the means test if your family income is in the lower half.  Because of this, the large majority of our clients pass the means test.

The more difficult way to pass the means test is to see if you can claim enough deductions to use up all of your income.  This allows some of our clients to pass the means test even though their family income is in the upper half for Georgians.

Be advised that calculating family income can be more complicated than it sounds and figuring out your claimable deductions can be very difficult.  Please schedule a free and confidential consultation with one of our attorneys to assist you.

Retaining your Property.  The second concern in Chapter 7 is figuring out whether you have any property at risk.  Georgia gives its residents a fixed amount of “exemptions,” which means you can keep property up to a certain value.  Again, the large majority of our clients do not have any property that would be at risk in a Chapter 7 because the exemptions typically cover all of a normal person’s assets.  If you have excess property, you may be at risk in losing the excess property to the bankruptcy trustee, who is appointed in every case to investigate whether any property is recoverable.

Eliminating Debt.  The third and biggest issue, and the purpose of any bankruptcy, is to eliminate debt and get a fresh start.  At the end of the typical four month Chapter 7, you will receive a discharge.  The discharge is an order from the judge granting your bankruptcy.  Generally speaking, the discharge eliminates all of your debt, with two main exceptions.  Certain special types of debts, like child support, alimony, student loans, and taxes, are usually not covered by the discharge.  Debts that you want to keep, such as car loans or mortgages, can be voluntarily “reaffirmed” with the creditor.  Debts like these are called “secured debts” because there is property pledged against the debt, which is sometimes called collateral.  If you do not wish to keep the debt, you can simply surrender the collateral property and eliminate the entire debt.  It is important to consult with an attorney about whether reaffirming a debt may be possible or beneficial.