If you are having financial struggles, one of the first things that you may be asking yourself is whether or not you even qualify for bankruptcy. It’s important that you hire an attorney that specializes in bankruptcy to help you through the process. The good news is that most people qualify for bankruptcy, but the problem is deciding which option is the best choice for your specific situation.
Do I Qualify for Bankruptcy?
For Chapter 7 bankruptcy, you can meet the income qualifications if you pass the “means test”. What this means is that if your family income is lower than the median income of Georgia, you could pass and get a discharge in the Chapter 7 case. You could also qualify for the Chapter 7 bankruptcy if you pass the means test after you subtract certain expenses that are allowed by the state.
If you don’t pass this means test, you could still qualify for Chapter 13 bankruptcy. This means that you can pay some or all of what you owe within a 5 year time period rather than getting a discharge. The problem with this option is that you need to be able to pay these debts off with your income. To determine this, there will be a similar calculation as would occur with a Chapter 7 bankruptcy.
The Difference Between Chapter 7 and Chapter 13 Bankruptcies
These two options are very different. A Chapter 7 bankruptcy is a liquidation where you will eliminate any unsecured debt such as medical bills, certain tax debt, and credit cards.
A Chapter 13 bankruptcy is a repayment plan that is meant to help people keep some assets, like their car or home. This can also be used to discharge debts that you may not be able to under a Chapter 7 bankruptcy.
With a Chapter 7 bankruptcy, you will have a trustee appointed to your case. They will sell any property that isn’t exempt under Georgia law in order to benefit your creditors. However, with a Chapter 13 bankruptcy, you can keep your property but you do have to pay the property value of the non-exempt property to your creditors through your Chapter 13 repayment plan.
Other Things to Know About Bankruptcy in Georgia
There are different exemptions when it comes to bankruptcy in Georgia, including:
- Exemption Domicile Rules
You need to be a resident of Georgia for a minimum of 730 days before you file the bankruptcy petition.
- Homestead Exemption
You are able to protect equity up to $21,500 (or $43,000 if married) in property that you reside in.
- Motor Vehicle Exemption
You can protect the value of your motor vehicle for up to $5,000 (or $10,000 if married).
- Wildcard Exemption
You are able to protect up to $1,200 for any property that you choose, plus an addition amount of unused homestead exemption up to $10,000. This amount doubles if married.
You will also have to take credit counseling courses, one prior to the bankruptcy and another before you get your discharge. There are also only 3 bankruptcy districts, so you have to go to the designated court in your area.
A lawyer that specializes in bankruptcy can be a great asset to you throughout this process, helping you determine the best approach for your specific situation.