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Filing Bankruptcy In Georgia

There are two main bankruptcy options available to Georgia residents – Chapter 7 and Chapter 13 bankruptcy. Chapter 7, often referred to as liquidation bankruptcy, is the most common form of bankruptcy and it allows an individual to eliminate their debts by liquidating their non-exempt assets. Before an individual files a Chapter 7 bankruptcy petition, they need to determine if they are eligible based on the ‘means test’. This test compares an individual’s income for the previous six months to the median income in Georgia based on their household size.

Those exceeding the median income limit are not eligible to file for Chapter 7 bankruptcy, but may be able to file for Chapter 13 bankruptcy instead.  In addition, Georgia residents seeking to file Chapter 7 bankruptcy must participate in a credit counseling program. The program must be sponsored by a court-approved agency and the program must be completed in the six months before the filing of the petition; individuals are required to submit proof of this counseling when filing. If certification of credit counseling is not submitted at the time of filing for bankruptcy, your case will be rejected (unless you are able to show that you filed the petition under emergency conditions). Along with certification of credit counseling, the court needs to be supplied with a ‘creditor matrix’ – this document includes the names as well as contact information of each of your creditors.  Within two weeks of filing the petition for bankruptcy, the court must be supplied with a full list of your assets and liabilities as well as proof of your income. Individuals seeking to file a petition for Chapter 7 bankruptcy must file in the bankruptcy court that is located closest to where they reside. A filing fee must also be paid; as of April 1, 2012, the fee is $306.00.

Because an individual is able to keep certain exempt property in a Chapter 7 bankruptcy, you will need to list all assets that may qualify for exemption with your petition.  Though some states allow a debtor to choose between federal and state exemptions, only state exemptions are available in Georgia. Currently, Georgia allows homeowners an exemption of up to $10,000 in home equity and up to $20,000 if married. Motor vehicles can also qualify for an exemption up to $3,500. Some other types of personal property eligible for an exemption include jewelry, up to $500, and clothing, appliances, housewares, furniture, and animals, up to $300 per item and $5,000 total. Exemptions are also provided for public benefits, insurance, pensions and retirement savings.

In order to receive a discharge of your bankruptcy case, Georgia requires that a financial education course be completed within the first 45 days of filing a Chapter 7 bankruptcy petition. In addition, you are required to attend a meeting of creditors, where your financial situation will be evaluated by the court.  As long as no new issues arise, your Chapter 7 petition should be discharged within 90 days (though in some cases, a discharge may take longer). Though a bankruptcy is often thought of as giving a ‘fresh start’ to debtors, it is important to understand that not all debts can be discharged in a bankruptcy and a bankruptcy can stay on your credit report for 10 years.

Other Bankruptcy Issues in Georgia

Who can file for bankruptcy in Georgia?

Any one who has not filed bankruptcy in the last 6 years, and is a resident of Georgia can file bankruptcy in this state.  If you are not a resident of Georgia, you must own real property in the state or own a business which operates in this state in order to qualify for bankruptcy relief under Georgia law.  For those individuals who own a business in this state, you may not be eligible to file for personal bankruptcy relief without first establishing residency.

How do I know if I am eligible for Chapter 7 bankruptcy?

When filing for bankruptcy, most people would prefer to file Chapter 7 bankruptcy.  This is because, Chapter 7 bankruptcy allows for the maximum amount of debt to be discharged.  For this reason, the government has taken measures to ensure Chapter 7 bankruptcy is only made available to those individuals who truly need it.  In order to determine whether or not you qualify for Chapter 7 bankruptcy, you will undergo what is known as a means test.  A means test works by comparing  your income to the average income of others in your area.  If you income is at or above the average rate for others in your area, you will not be eligible to file for Chapter 7 bankruptcy.

If I file for bankruptcy will my spouse be effected as a result?

While there is no law which states married couples in the state of Georgia must file a joint petition for bankruptcy, there are many benefits to filing a joint petition.  This is especially true for couples who share a lot of joint debt.  If you chose to file without your spouse, your spouse’s responsibility to pay your joint debts will not be discharged.  This means that while your spouse will not be effected by any of the negative effects of your choice to file bankruptcy, they will also not enjoy any of the benefits of your bankruptcy relief either.

What are Georgia’s property exemption laws?

Georgia’s property exemption rules are as follows:

  • Homestead exemption of $10,000 for single people and $20,000 for married couples
  • Motor Vehicle up to $3,500
  • Personal property of up to $5,000 with no 1 item exceeding $300 in value
  • 75% of all wages
  • Public benefits
  • $1,500 in professional books or tools of the trade
  • Certain insurance benefits
  • Wild card exemption allows for the protection of $600 in assets of your choice

What do I need to do before I can file for bankruptcy?

Prior to filing for bankruptcy in Georgia, you should consult with an experience bankruptcy attorney.  You will also need to sign up for an approved credit counseling course.

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