Here are some FAQs and answers. REMEMBER: THE LAW OFTEN CHANGES AND EACH CASE IS DIFFERENT. THIS PAGE IS MEANT TO GIVE YOU GENERAL INFORMATION AND NOT TO GIVE YOU SPECIFIC LEGAL ADVICE. Contact us for more help.
Bankruptcy is a legal proceeding in which people who cannot pay their bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.
Bankruptcy may make it possible for you to:
- Eliminate the legal obligation to pay most or all of your debts. This is called a 'discharge' of debts. It is designed to give you a fresh financial start.
- Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments.
-In some instances eliminate second mortgages, depending on the equity position of the second mortgage.
- Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
- Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
- Restore or prevent termination of utility service.
- Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.
Bankruptcy, however, cannot cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:
- Eliminate certain rights of 'secured' creditors. A 'secured' creditor has taken a mortgage or other lien on property as collateral for the loan. Common examples are car loans and home mortgages. You can force secured creditors to take payment over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money if your property is taken. Nevertheless, you generally cannot keep the collateral unless you continue to pay the debt.
- Discharge types of debts singled out by the bankruptcy law for special treatment such as child support, alimony, some student loans, court restitution orders, criminal fines, and some taxes.
- Protect cosigners on your debts. When a relative or friend has co-signed a loan, and the consumer discharges the loan in bankruptcy, the cosigner may still have to repay all or part of the loan.
- Discharge debts that arise after bankruptcy has been filed.
There are four types of bankruptcy cases provided under the law:
- Chapter 7 is known as 'straight' bankruptcy or 'liquidations.' It requires a debtor to give up property which exceeds certain limits called 'exemptions', so the property can be sold to pay creditors.
- Chapter 11, known as 'reorganization', is used by business and a few individual debtors whose debts are very large.
- Chapter 12 is reserved for family farmers.
Chapter 13 is called 'debt adjustment'. It requires a debtor to file a plan to pay debts (or parts of debts) from current income.
Most people filing bankruptcy will want to file under either chapter 7 or chapter 13. Either type of case may be filed individually or by a married couple filing jointly.
In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for 'exempt' property which the law allows you to keep. In most cases, all of your property will be exempt, but property which is not exempt is sold, with the money distributed to creditors.
If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a chapter 7 case probably will not be the right choice for you. That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.
In a chapter 13 case you file a 'plan' showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property - especially your home and car - which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind.
You should consider filing a chapter 13 plan if you:
- Own your home and are in danger of losing it because of money problems.
- You are behind on debt payments, but can catch up if given some time.
- You have valuable property which is not exempt, but you can afford to pay creditors from your income over time.
You will need to have enough income in Chapter 13 to pay for your necessities and to keep up with the required payments as they come due.
Every bankruptcy case is different. After an evaluation of your case, our staff can provide you with a fee. Generally, we can accept a partial payment at the time of filing with the remainder due at your creditorâ€™s meeting.
In most cases you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt. Even if your property is not fully exempt, you will be able to keep it, if you pay its non-exempt value to creditors in Chapter 13.
However, some of your creditors may have a 'security interest' in your home, automobile or other personal property. This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make these security interests go away. If you don't make your payments on that debt, the creditor may be able to take and sell the home or the property, during or after the bankruptcy case.
There are several ways that you can keep collateral or mortgaged property after you file bankruptcy. You can agree to keep making your payments on the debt until it is paid in full. Or you can pay the creditor the amount that the property you want to keep is worth. In some cases involving fraud or other improper conduct by the creditor, you may be able to challenge the debt. If you put your household goods as collateral for a loan (other than a loan to buy them), you can usually keep your property without making any more payments on that debt.
In a Chapter 7 case, you can keep all property that which the law says is 'exempt' from the claims of creditors. In general, you can keep retirement accounts, some equity in your home and car, and household goods, furniture and appliances. Your attorney can give you detailed advice as to the exemption statutes in Georgia, and advise you on protecting your assets.
While your exemptions allow you to keep property even in a Chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind. In a Chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases, you will have to pay the mortgage or liens as you would if you didn't file bankruptcy.
Yes, with some exceptions. Bankruptcy will not normally wipe out:
- money owed for child support or alimony, fines, and some taxes;
- loans you got by knowingly giving false information to a creditor, who reasonable relied on it in making you the loan;
- debts resulting from 'willful and malicious' harm;
- student loans owed to a school or government body;
- 1st mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor).
In most bankruptcy cases, you only have to go to a proceeding called the 'meeting of creditors' to meet with the bankruptcy trustee and any creditor who chooses to come. Most of the time, this meeting will be a short and simple procedure where you are asked a few questions about your bankruptcy forms and your financial situation.
Occasionally, if complications arise, or if you choose to dispute a debt, you may have to appear before a judge at a hearing. If your need to go to court, you will received notice of the court date and time from the court and/or from your attorney.
There is no clear answer to this question. Unfortunately, if you are behind on your bills, your credit has already suffered. Bankruptcy will help you recover your good credit rating.
The fact that you've filed a bankruptcy can appear on your credit record for ten years. But since bankruptcy wipes out your old debts, you are likely to be in a better position to pay your current bills, and you may be able to get new credit.
Utility services--Public utilities, such as the electric company, cannot refuse or cut off service because you have filed for bankruptcy. However, the utility can require a deposit for future service and you do have to pay bills which arise after bankruptcy is filed.
Discrimination--An employer or government agency cannot discriminate against you because you have filed for bankruptcy.
Driver's license--If you lost your license solely because you couldn't pay court-ordered damages caused in an accident, bankruptcy will allow you to get your license back.
Co-signers--If someone has co-signed a loan with you and you file for bankruptcy, the co-signer may have to pay your debt. Â