Good Morning, this is Roger Ghai of www.Chapter7attorneys.com. I wanted to do a little informational video on bankruptcy options. In particular, Chapter 7 bankruptcy options and Chapter 13 bankruptcy options. I hope you find this helpful.
Let’s begin with Chapter 13 options: For those of you who don’t know, Chapter 13 is a ‘repayment bankruptcy.’ It is a consolidation bankruptcy, and a lot of times it’s known as a wage earner’s repayment bankruptcy. That type of bankruptcy typically lasts from 3 to 5 years.
Whether you’re filing a Chapter 7 bankruptcy or whether you’re filing a Chapter 13 bankruptcy, the court is going to look at ‘median income’ that you’ve made. What ‘median income’ is defined as is the income, which you’ve earned from the six (6) months prior to filing your bankruptcy case. Depending on the level of that income you may be required to file a Chapter 13 case or you may be eligible and be able to file a Chapter 7 bankruptcy case.
In both cases the court is also going to look at what we call ‘disposable income.’ ‘Disposable income’ simply means the amount of the money that you have at the end of the month to pay your creditors. So, after your normal household expenses, after you pay your mortgage payment or your rent payment and your necessities of life: electricity, food and so forth. If you have $1,000 a month left at the end of the month, then that would be your Chapter 13 payment in the bankruptcy if you file a Chapter 13 bankruptcy case.
Now, many times clients have a frustration with the fact that their Chapter 13 bankruptcy payment plan is too expensive or they can’t afford it. Then, if that’s the case, then you may want to consider a Chapter 7 bankruptcy case and just be done with the debt.
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Chapter 13 bankruptcy cases can be expensive. Because the case has to be monitored by the attorney’s office for 3 to 5 years the attorney fees are quite expensive. They’re probably between $3500 and $4500 here in the metro Atlanta area. The length of the case, as I’ve already mentioned, lasts anywhere from 3 to 5 years. That just depends on the amount of the debt that you have. As far as how successful the Chapter 13 bankruptcy case is, unfortunately, that’s not a very good statistic. Typically, the Chapter 13 bankruptcy cases fail at the rate of 75%. So, in other words, 75 out of 100 Chapter 13 cases fail. Typically, what happens when the Chapter 13 cases fail, the client ends up filing a Chapter 7 bankruptcy case anyhow.
Now, I wanted to take a moment, I’m going to move to the other side of the screen here, to talk about Chapter 7 bankruptcy cases. Chapter 7 bankruptcy cases, on the other hand, are known as a ‘fresh start bankruptcy.’ A ‘fresh start’ means that your debts are discharged. ‘Discharge’ in legal jargon simply means that the debts are wiped out. Most debts are wiped out. Some debts such as a DUI conviction, or a fraud charge, or things of that nature are not wiped out. Child support, of course, cannot be wiped out. Under the current laws student laws cannot be wiped out although there is a bill pending in Congress right now to change that. Most debts such as credit cards can be wiped out. Other general unsecured debts… medical bills can be wiped out and different types of accounts you may have.
Not everybody can qualify for Chapter 7 debt relief bankruptcy. And again, the court is going to look at the median income to determine whether you can, in fact, qualify for Chapter 7 debt relief. For example, in Georgia, if you make, as a single individual, more than $41k in Georgia you will not be able to qualify, probably, for Chapter 7 relief. If your household is 2 people then the income threshold limit is approximately $53k. If your household is a family of 3, and you are earning about $61k that is approximately the cut off. If it is a family of 4, the immediate income level is about $68k, and if there are additional family members in the household, then, the income, median income level is raised by $6,800 per additional family member.
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Sometimes even if it looks like initially you cannot qualify for Chapter 7 bankruptcy debt relief because you are above the median income there are certain deductions that may, in fact, bring you below the median income. Typically, those deductions might be such things as your mortgage payment that can be an expense that could be used to bring you below the median income. Child support payment or a court ordered payments could be used to bring you below the median income. Maybe a vehicle payment could be used to help to bring you below the median income. So there are various different other expenses that MIGHT allow you, even though initially it looks like you don’t qualify for Chapter 7 bankruptcy debt relief.
The court also, just like in a Chapter 13 case, is going to be looking at your disposable income. Again, disposable income is simply the amount of money that you have after your normal household expenses that you have left at the end of the month. In a Chapter 7 case, really, you cannot have any disposable income in order to be able to qualify for a Chapter 7 relief, a Chapter 7 bankruptcy relief.
The average attorney fees in a Chapter 7 case in Metro Atlanta, Georgia are going to run between $1000 and $1500 depending on the law firm you go to. In my practice, the average fee is $1100 for a typical case. Normally payment plans are available for the attorney fees even on Chapter 7 bankruptcy cases. The court fee for a Chapter 7 case is going to be $299. That fee is separate from the attorney fees and that must be paid whenever the case is filed. On the other hand, in a Chapter 13 case the court fee is a little less expensive at $274. Typically, a Chapter 7 case lasts for a lot shorter period of time. In fact, once we file the case, from the start to the finish, typically, the Chapter 7 case is concluded or brought to a finish within approximately 5 months. The statistics show that on a national basis Chapter 7 have about a 97% success rate. When I file cases for Chapter 7 we usually have even higher than that. It just depends on the individual circumstances.
Thank you for listening to this video and I appreciate your time. If you have any questions please feel free to visit our website at www.Chapter7attorneys.com or call me at (770) 792-1000. Thank you again.