In these uncertain economic times,bankruptcy in Georgia should have an obvious attraction for residents who have worked long and hard to build a life for their families. These breadwinners that have prided themselves on their household’s efforts to maintain budgets only to find that the American financial system (which so encouraged the credit cards and charge accounts that initiated such troubles) no longer guarantees an easy way out. Much as the various forms of bankruptcy protection may seem to provide a dignified escape route for deserving families who wish to get themselves out of any increasing debts – particularly for those borrowers who have recently fallen into unexpected troubles such as medical emergencies or sudden bouts of unemployment (which residents of all parts of Georgia have sadly come to expect during the recent economic down turn) – there are new and exciting opportunities for debt elimination above and beyond bankruptcy. Just because past generations had no choice but to turn to bankruptcy protection for their overwhelming burdens when no additional alternative could have been suggested, residents of Georgia in the twenty first century should not automatically rush toward Chapter 7 or Chapter 13 bankruptcies simply because this form of debt management and debt elimination has become the most common. As a matter of fact, after the severe alterations of the national bankruptcy code in past years, the current bankruptcy protections no longer (from all discussions that we have had with borrowers facing the same dilemmas regarding financial burdens they are unable to satisfy) meet the needs of Georgians who have a strong work history and personal possessions that they wish to keep safe.
Given all of the changes to the United States bankruptcy court following recent congressional legislation, the original meaning of the Chapter 7 bankruptcy protections has long since been dissipated by the political muscle of the credit card conglomerates. As we shall soon explain, Georgia borrowers are considerably better taken care of than their countrymen who must depend on wafer thin federal statutes, but, nevertheless, there are a few advantages to the bankruptcy program that still could be more than useful for the right debtors. First and foremost, the mere declaration of bankruptcy should guarantee all Georgia filers a shield from harassment by their actual creditors or the collection agencies that have purchased the loans. This automatic stay, as the temporary protection is now known, offers more than just an end to irritating phone calls and the past due envelopes cluttering the mail box. After a bankruptcy petition has been properly filed, Georgia law will put an immediate halt to any home foreclosure proceedings or lawsuits that threaten penalties including wage garnishment and asset forfeiture. While a small number of Georgian consumers require such assistance to protect their homes and vehicles, many just want the telephone to stop ringing. It’s no little thing, your authors understand, to reduce the stresses – proven by medical studies to be demonstrably harmful to the health of afflicted consumers – that result from unsatisfied debt loads. Unfortunately, too many heads of household around Georgia ignore their financial problems until they have no recourse but to follow their instincts toward bankruptcy protection. Again, we certainly understand these consumers’ motivations, but, after years spent working with debt ridden consumers in Georgia and throughout the southeast, your authors feel that they should explain a bit about the current state of bankruptcy and the new (and, in many instances, more successful) options designed to aid borrowers eliminate their credit burdens.
Even those Georgian borrowers who have talked extensively with friends and family and co-workers about the benefits and risks of Chapter 7 bankruptcy protection – for that matter, even those borrowers who have previously seen the need to eliminate debts through bankruptcy – end up unhappily shocked once they realize just how dramatically these protections have changed. In the fall of 2005, congressional legislation forever changed what would be available from bankruptcy for Georgia residents and most anyone that lives and works within the United States of America. Ever since these bankruptcy laws were reworked, the process of filing for bankruptcy requires newly stringent guidelines that demand exact verification of all necessary paperwork, and, for ordinary consumers, that will mean the assistance of bankruptcy attorneys well practiced in the financial laws of Georgia as well as the federal government regulations. Even beyond the bank statements and tax documents that everyone who declares a Chapter 7 or Chapter 13 bankruptcy petition should already expect to have on hand, there’s a purposefully irritating routine now in place which necessitates a careful preparation of all documents regarding financial transactions. Mishandled paperwork turned in to the Georgia country clerk has been known to result in cases of bankruptcy being thrown out just days before discharge, and, after the 2005 changes, it is now far more difficult for consumers to file for bankruptcy a second time after their petition was judged to be insufficiently recorded or sloppily carried out. Given these limitations and the ever more complex state exemptions regarding property seizure, the value of representation from law firms experienced in the statutes and regulations of Georgia bankruptcy codes should be highlighted. Although the costs of well versed bankruptcy attorneys continues to grow alongside the demand – with more and more Georgia consumers feeling the brunt of consumer debt loads – we cannot overestimate the attorneys’ role in the successful realization of bankruptcy debt management.
After the 2005 changes to the bankruptcy code, a means test analyzed by trustees chosen arbitrarily by the Georgia judicial system will be used as the sole designation of whether or not any borrowers will be allowed to enter the Chapter 7 bankruptcy protection. Simply put, any Georgia borrower will have to look at the median income for consumers in their state and attempt to figure out whether or not they have made more money than their fellow citizens in the past year. Eligibility requirements no longer care solely at the borrower’s assembled debts, and every Georgia debtor should look toward the census figures for their state. In 2008, a single head of household would have to earn under forty thousand a year to be considered eligible for Chapter 7 bankruptcy protection – for a family of two, they’d have to earn under fifty thousand; for a family of three, they’d have to earn under fifty eight thousand; for a family of four, they’d have to earn under sixty eight thousand and so on. In Georgia, if the household earnings are shown to be more than the median for the state over the past six months before filing for bankruptcy, they will have to show that their assembled monthly obligations would not allow for repayment of their various loans. After listing all of the monthly stipends which would be allowed under bankruptcy protection as well as those payments for everything from tax debts to school loans (up to the amount of fifteen hundred dollars a year) to home mortgages, the trustee will use census data – as filtered by the Internal Revenue Service – to calculate the household expenses of the borrower to see whether or not they could realistically afford a hundred dollars a month or six thousand dollars over the period of five years to repay past unsecured creditors. If the Georgia residents could afford that amount, the only debt management option available to those consumers would be the Chapter 13 bankruptcy protection program.
Keeping in mind the increased difficulties with arranging the Chapter 7 debt elimination, borrowers need to pay strict attention to every line of the bankruptcy documents. As soon as the Georgia resident files a formal petition (alongside the financial affairs statement and creditor matrix), the court official randomly assigned to their case shall begin examining all applicable documents. For bankruptcy forms to be officially finished in the eyes of the Georgia and federal courts, the borrower must list all of the information that has to do with their various lenders as well as an accurate accounting of their earnings for the previous few years. The petition also asks the Georgia consumers filing for bankruptcy to outline their monthly household expenses. While this shall not have much to do with the borrowers that qualify for Chapter 7 debt elimination bankruptcy protection, these expenses (along with all of the monthly bills and utilities, even those bills relating to debts that the borrowers do not want to liquidate such as mortgage and vehicle loans) could actually help out the filers who earn just a bit too much for automatic Chapter 7 eligibility as compared to other Georgian heads of household. In the event that the borrowers’ earnings threaten the chances of finding traditional bankruptcy protection, there’s still the possibility of that so called means test which could potentially lift the family out of their burdens. Unfortunately, when it comes to the household expenses, the Georgia courts are forced by the minutiae written into the 2005 legislation to primarily consider the average costs of living for every Georgia resident as calculated by the Internal Revenue Service. Worse yet, for those consumers who find themselves drawn into the Chapter 13 program without their consent – believe it or not, some borrowers, primarily home owners worried over foreclosure proceedings (so sadly common around all parts of Georgia the past few months) actually want the service – these IRS guidelines of family expenses are formally set as law no matter the borrower’s accumulated burdens.
When first filing the petition, the administrative charges demanded by the Georgia county court system for bankruptcy may be relatively low – just under three hundred dollars at the time of this article’s publication – but these charges are just the tip of the iceberg as far as bankruptcy costs are concerned. Ridiculous as it may seem, even though Chapter 7 bankruptcy protection was instituted by the United States government to provide a fresh start and new opportunity for our poorest citizens, many of the residents of Georgia who most need assistance with their credit accounts may honestly not have sufficient funds to take full advantage of the program. Ever since the 2005 congressional act, borrowers in Georgia and across the nation have been forced to take (absolutely purposeless, by all accounts) credit counseling courses on their own dime and pass these courses both before they could file for Chapter 7 bankruptcy protection and again before their debts would be discharged. Leaving aside the not inconsiderable costs of these courses, only a few counselors in the state of Georgia are licensed by the federal government to satisfy the new bankruptcy requirements, and borrowers who are living in the more rural areas of Georgia could find the time and distance more than they would easily be able to satisfy given their household commitments and employment demands. Most of the Georgia consumers we have spoken with who have seriously investigated the bankruptcy alternative are actually holding down more than one job as they attempt to repay their various credit accounts, and these honorable borrowers – the exact sort of men and women that our forefathers created bankruptcy protection to safe guard even as they tried to rebuild their lives following unforeseen calamities or foolish choices – are too often prevented from governmental help because of the changes to the national bankruptcy code.
Much as the aforementioned problems raise genuine concerns for aggrieved Georgian households, we have not even brought up the ever rising prices charged by experienced bankruptcy attorneys. As the Chapter 7 and Chapter 13 programs grow more popular for every class and social strata of Georgia borrowers following the economic downturn hurting all parts of the American workforce (and depressing the home owners’ real estate value at the same point), the demand for lawyers trained and well practiced in the art of Georgia bankruptcy litigation has climbed just as directly. It’s a simple case of supply and demand, but, especially after the 2005 alterations to bankruptcy statutes exponentially increased the complexities surrounding Chapter 7 and Chapter 13 petitions and made the use of reputable law firms more important than ever before, the attorney fees are simply more than many deserving Georgia debtors could hope to afford. More to the point, many of our proudest sons and daughters of Georgia have no idea just how to even search for an attorney and, barely understanding the repercussions of the congressional changes to bankruptcy protection, are too often taken advantage of by unscrupulous shysters with a snappy line and expensive office suite. A surprising number of Georgia residents are not even aware of the new alternatives to bankruptcy that have popped up around the United States in the past few years and, in many circumstances, genuinely been more effective in aiding consumers through their attempts at debt relief than the old standby of Chapter 7 bankruptcy.
The list of drawbacks to bankruptcy goes on. Most Georgia borrowers already know that their credit will take a severe hit after the bankruptcy declaration, but there could be even more serious consequences depending upon the specific household. Court officials will take charge of all possessions that they believe the consumer filing for bankruptcy protection should not be allowed to retain. After these ‘assets’ have been sold, the Georgia trustee will then attempt to remunerate the costs of bankruptcy within the county court system and only then hand over the funds to the lenders as the trustee sees fit (any loan attached to assets will be prioritized above the unsecured burdens). While the continuing economic problems that are so drastically affecting lives in Georgia and the rest of the southwest are of an obvious concern for all Americans, the larger financial consequences have had at least one positive impact for borrowers that aim to utilize bankruptcy protection in order to erase their debt loads. The sudden drop in real estate valuations seen across the state of Georgia (with Atlanta and the larger municipalities suffering the greatest depreciations) will accordingly lower the estimated housing prices as calculated by a licensed Georgia appraiser. Home owners should be aware that, though their primary residence will be protected under the Georgia homestead exemption, an exceptionally large amount of equity – that is, the theoretical value of the home once mortgages have been subtracted – could prove problematic for consumers seeking to take advantage of the Chapter 7 program. Once again, for the grand majority of Georgia property owners, this potentiality should never even come into play, but borrowers should still at least be aware of their own equity midst these drastically fluctuating markets and ensure that their residences remain free from the demands of court trustees and the newly restrictive statutes following the 2005 congressional legislation.
For most Georgia home owners, the existing mortgage liens attached to their property shall simply be reaffirmed under formal procedures, and, as long as the borrowers continue to make their payments on time every month, the family shelter should not be a significant source of worry. However, every debtor even considering Chapter 7 or Chapter 13 bankruptcy protection should think twice about whether or not the cure would be worse than the disease. There’s a sense of well being to be purely drawn from careful budgeting and the knowledge that the borrower’s family will earn or will soon earn larger amounts of money than what shall be immediately paid out to the creditors. There’s no easy answer to all of the sleepless nights lost imagining the interest accruing from past loans, but bankruptcy protection this day and age is barely a last resort. Any Georgia borrower that begins to have trouble with their minimum payments on credit card accounts or realizes that they could not easily afford sufficient funds to pay back the compiled balances should at least think about investigating options beyond bankruptcy. While mortgage equity loans have been largely abandoned by reputable firms after the sub prime lender catastrophe and the general downward spiral of Georgia real estate, there are some new approaches that feature certified professionals who work with debtors to drive down balances and interest rates on clients’ unsecured loans without technically consolidating the loans within their own firm – which has far more positive repercussions as far as credit reports and FICO scores are concerned. Debt settlement negotiation, in particular, has exploded in popularity among Georgia borrowers.
So many Georgian borrowers seem drawn to bankruptcy because they believe it to be the simplest option. After all, with over a hundred years of tradition behind Chapter 7 debt elimination bankruptcy programs it’s the most recognized form of debt relief. From the moment borrowers file their petition for bankruptcy, all lenders will be forced to stop their attempts at communicating with their debtor clients through what has become known as an automatic stay. In point of fact, a number of 222 borrowers that we have spoken with first took interest in bankruptcy purely for this governmentally designed halt to creditor harassment: and, more importantly for home owners facing duress, temporary end to foreclosure proceedings. Afterwards, a lender that wishes to collect their debts from a consumer rightfully engaged in bankruptcy protection would have to provide clear and demonstrable evidence to the 222 court trustee (a judge arbitrarily chosen from the borrower’s home 222 county) that some reason exists why they
Traditionally, just about one month after the bankruptcy paperwork has been delivered to the county courthouse (though, given the mad rush for debt relief around Georgia the past year, every bit of the bankruptcy proceedings may be unnaturally delayed for obvious reasons), there will be a creditor assemblage that has become known in the bankruptcy system as a 341 meeting. While the borrowers will have to attend this hearing so that the court appointed trustee could interrogate them about their various obligations, creditors have rather more leniency and often will avoid the entire business should the debts be sufficiently low. Otherwise, presuming the initial 341 hearing goes well, the creditors will have two months afterwards to attempt to argue that they deserve full recompense, but, especially in this day and age with the new statutes effectively arguing the lenders’ case for them through the new statutes, this virtually never happens . Following the 341hearing, under normal circumstances, borrowers should not have any more tasks to worry about until the trustee agrees to a discharge of the loans as long as the borrower provides the court with all of the data that the officials ask for.
While bankruptcy formerly meant the liquidation of all previous debts for either individual heads of household or owner operated businesses, the governmental protection has grown to cover a wide swath of different interests. Under the current statutes, two different chapters of bankruptcy apply to Georgia residents as well as couples who are legally married and do not have businesses that would be potentially involved with the governmental protection. Chapter 7, the most common sort of bankruptcy by far, liquidates certain varieties of consumer debt while Chapter 13 merely restructures these debts alongside the secured burdens such as home mortgages and auto loans while organizing a schedule of repayment. For every George borrower who feels that they are behind the eight ball, it’s time to learn more about the process of bankruptcy declaration and investigate all of the other options. For those home owners who have purchased a primary residence in Georgia that – because of one sudden calamity or a succession of missteps – have serious tensions about their home --- then Chapter 13 may be the way to go. Even those borrowers otherwise in decent shape financially who, for whatever reason, find that they have to suffer through divorce proceedings, could find Chapter 13 a more efficient and less destructive solution to their growing debts.
Still and all, bankruptcy – even the Chapter 7 bankruptcy debt elimination program – will not be able to take care of all Georgia residents’ burdens. Child support, alimony, student loans, governmentally assayed fines, luxury purchases of more than five hundred dollars made within the last three months, cash taken from credit accounts more than eight hundred dollars taken out within the last two months, and any debts that the Georgia courts may find to be redolent of fraud will all be taken. Chapter 7 debt liquidation bankruptcy has been popularly thought to be the easiest sort of protection
Prior to thinking about bankruptcy protection, every family will have alternatives that they may desire. Employment status or assets available will be a determining factor in the options afforded. Ones options may be expanded by consolidation of payments. With the assistance of a credit counseling service, one may find that consolidating all debt through a debt consolidation loan could free up vital immediate assets.
In addition to bankruptcy protection, there are different options that consumers from our state could find salvation from. Debt consolidation, for example, has become very popular, but many of the consumers do not understand that there are two different types of consolidation loans. One is simply a loan from a company which assumes the accumulative debts accrued with the respective creditors involved and becomes the sole establishment to which payments are made.
Through home equity consolidation, borrowers could reduce their expenses while also bettering their household economy, but every borrower should look into their hearts and family budget prior to approaching this decision. The factions who foster this manner of lending are not in the business of losing money. In times of desperation, failure to make good on ones responsibilities to said lenders could leave one out of hat and home.
For every property owner considering the consolidation debt solution, it’s important to remember that equity is a malleable entity. Borrowers only own their house so long as their mortgage brokers believe they have a good chance of paying back the original loan.
It’s not an altogether uncommon situation. A good person, a regular Joe finds himself in a sensitive situation. A situation in which he might need to reach out with his hat in his hand and go under the thumb of another to avoid outright bankruptcy. Maybe he’s stretched it out a little thin and more than one creditor is knocking on his door, scaring his family and shaming his house in the neighborhood.
It’s reasonable that every consumer who fights against their debt loads would want to utilize every possibility at their disposal: no borrower can have too many friends. With Consumer Credit Counseling; the lenders are usually agreeable to a reduction of the interest rates applied to the loans and, with extended terms of repayment, lower monthly minimums. With most of these sorts of strategies, the borrowers send their funds every month towards the authorities they have selected to handle their debts, and these deposits shall be sent to the lenders as previously determined by the debt professionals involved. Remember, even the Chapter 7 debt elimination bankruptcy program will not liquidate those debts that are legally attached to the borrower’s assets such as mortgages, and the creditor retains the potential for foreclosure proceeding should the home owners fail to make their payments on time every month.
A bankruptcy does not wipe out voluntary liens, like mortgages and deeds of trust, or tax liens. So the lender still has the right to foreclose if you do not pay. If you pay, everyone is happy. Remember, the lender does not want the property; it wants you to pay regularly on the loan. Foreclosure is a last resort for the lender if it concludes it can't get the owed money any other way. If there is less than $5,000 in equity in your house, you can claim a "homestead exemption" and keep the house, as long as you pay the mortgages. If there is more than $5,000 in equity, it is possible you could lose your home. In that case, you may wish to consider a Chapter 13 bankruptcy. If there is no equity in your car, after subtracting any car loans and exemption from the car's present value, the bankruptcy trustee will not take the car. If there is more than $3,500 equity in your car, you may be able to pay the difference between the value of the car and the $3,500 equity allowed to the Chapter 7 trustee and keep the car. If you still owe money on the car, you can choose to reaffirm the debt to the secured lender. Under the new law, you have to reaffirm your car loan within 45 days after the "341 meeting." You no longer have the option of continuing your car payments without reaffirming the loan. Once the loan is reaffirmed, if you default on your payments and the car is repossessed, you are liable for the repossession deficiency.
You also have the option to redeem the car within 45 days of the "341 meeting" by buying it from the secured creditor in a single payment for its present value.
Under Georgia bankruptcy laws, you can keep:
* Your interest in real or personal property that you or your dependents use as a residence, or in a cooperative that owns property that you or your dependents use as a residence, or a burial plot, up to $10,000 in value ($20,000 if you are married and you and your spouse jointly file for bankruptcy), but only if you don't claim the homestead exemption
* Household furnishings and goods, clothes, appliances, books, animals, crops, and musical instruments, up to $300 in value per item, but not to exceed $5,000 in total value
* Jewelry, up to $500 in total value
* Any professionally prescribed health aids
* Social security, unemployment compensation or local public assistance benefits
* Veterans' benefits
* Disability, illness or unemployment benefits
* Alimony, support or separate maintenance as needed for support
* Pensions and individual retirement accounts
* Professional books and tools of your trade, up to $1,500 in value
* Crime victims' compensation
* Payment for personal injuries (not including pain and suffering or compensation for actual pecuniary loss), up to $10,000
* Payment for compensation for loss of future earnings as needed for support
* Payment for the wrongful death of a person you were dependent upon as needed for support
* Payment under a life insurance contract on the life of a person you were dependent upon as needed for support
* Any unmatured life insurance contract except a credit life insurance contract
* Your aggregate interest in the loan value on any unmatured insurance contract, up to $2,000
* Your aggregate interest, up to $600 in value in any property, plus any unused portion of the homestead exemption to a maximum of $5,000
The decision to reach out for help with your debt is not one that's easy to make. You were raised to "do the right thing", but now it’s nearly unbearable. You struggle along while your creditors are turning up the heat. And now you’re at the point where the late fees, penalties and interest expense make it impossible to keep your head above water.
Ask yourself this. If you could eliminate your debt without permanently damaging your credit, why wouldn't you?
