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As coronavirus financial relief programs end and banks resume aggressive debt collection tactics, the number of bankruptcy filings are on the way up. Since the Supreme Court has recently removed some debtor protections in federal law, once creditors begin demanding payment, they know they don’t have to let up.
During the darkest days of the pandemic, and even now, many families cannot keep up with home mortgage payment and other secured debts. Others are still trying to pay off credit card debt they racked up during a period of unemployment.
Financial problems cause your life to spiral out of control. A Georgia bankruptcy lawyer helps you regain control of your own monetary situation. As outlined below, bankruptcy offers distressed debtors several options.
Chapter 7
This form of bankruptcy is quite straightforward. It discharges (eliminates) unsecured debts in as little as six months. Unsecured debts include things like:
- Medical bills
- Credit cards
- Payday loans
- Revolving charge accounts
About six weeks after petitioners file, the trustee (person who oversees the bankruptcy for the judge) reviews the paperwork in the case. Typically, the trustee recommends immediate debt discharge. Most Chapter 7 debtors get to keep all their property.
Chapter 13
The so-called wage-earner plan gives debtors up to five years to erase delinquent secured debts, like past-due mortgage or car payments.
The trustee sets up a monthly debt consolidation plan. This income-based plan takes care of allowed claims, such a delinquent secured debts and administrative costs.
In most cases, creditors must accept this repayment plan. The Automatic Stay prohibits them from taking any adverse actions, like foreclosure, while the case is open.
“Chapter 20”
Some jurisdictions allow this informal bankruptcy, which is a combination of a Chapter 7 and Chapter 13 (hence Chapter 20, get it?).
Assume Jimmy owed back taxes to the IRS. Past due income taxes are priority unsecured debts which are only dischargeable in some situations. He doesn’t qualify for discharge under the complicated rules. Most courts would allow Jimmy to file a Chapter 13 after the judge closes his Chapter 7. Jimmy isn’t eligible for a discharge, but he doesn’t need one. He just needs time to repay his IRS debt.
Financial relief is available to distressed debtors. For a free consultation with an experienced bankruptcy lawyer in LaGrange, contact Moffitt Law, LLC. The sooner you reach out to us, the sooner we start working for you.
FAQs
Does bankruptcy ruin your credit?
No. Bankruptcy lowers your score, but it does not ruin your credit. If they borrow money responsibly and pay their bills on time after bankruptcy, most people recover quickly.
Which bankruptcy is best, Chapter 7 or Chapter 13?
You cannot go wrong either way. Chapter 7 quickly erases credit card and other unsecured debt. Chapter 13 gives families time to catch up on house payments and other secured debts.
How Do I Qualify for Chapter 7?
Your income must be below average for that household size in that geographic area. Additionally, you must attend two brief financial management seminars.
