With the fluctuations in the economy, the rising cost of health care, and the high unemployment rate, it is little wonder why so many households decide to file for bankruptcy as a means to get out of debt. In fiscal year 2015 (September 2014 to September 2015), nearly 1.1 million bankruptcy cases were terminated.
Declaring bankruptcy can help people regain their financial footing and get the fresh start they so desperately need. This avenue of relief should also be used in certain circumstances, when all other means of have been exhausted. If you have budgeted, sought debt counseling, and have tried to bring in extra income yet you continue to see your debt rising, it might be time to start looking into your bankruptcy options.
To begin exploring your financial options for getting out of debt, call the Ghai Law Firm at 770-233-7474 and request a free consultation with a bankruptcy attorney in Kennesaw.
Which type of bankruptcy should I choose?
Bankruptcy codes can be hard to navigate and challenging to understand. The federal government provides several types of bankruptcy options, but individuals typically use one of two options. Each type of bankruptcy is detailed in its respective chapter within Title 11 of the US Code, i.e., the provisions for Chapter 7 bankruptcies are found in 11 USC Chapter 7.
Below is a basic overview of the two most common options, although your attorney will be able to best evaluate under which chapter you should file.
- Chapter 7 – In 2015, over 550,000 people filed Chapter 7 petitions. Both business entities and individuals may qualify to use this avenue. It is generally most desirable because you may qualify to keep certain property you want (such as your house and your car), but you can have all your other debts discharged. In other words; you do not have to pay your creditors back.
- Chapter 13 – Those who do not qualify for a Chapter 7 may opt for a Chapter 13. In this type of bankruptcy, you still have to pay creditors back, but you do so under a reorganized debt repayment plan. Just over 300,000 people filed under Chapter 13 in 2015. This type of bankruptcy is only suitable for individuals. One of the benefits of a Chapter 13 is that you are able to keep all of your property, and filing will halt any foreclosure proceedings on your home. Your debts are usually lowered and your monthly payment will be manageable. Most people satisfy their debts with a three- to five-year repayment plan.
For a free legal consultation with a bankruptcy lawyer serving Kennesaw, call (770) 792-1000
Do I qualify to file for bankruptcy?
Each type of bankruptcy has a specific set of eligibility requirements to file. First, if you want to file a Chapter 7, you must be able to pass “the means test,” which is essentially an income threshold. In order to qualify, your disposable income must be below the median income in Georgia.
If you have too much disposable income to qualify for a Chapter 7, you will likely need to file under Chapter 13.
In addition to the means test, there are other requirements you will need to meet before filing. For example, if you have filed for a Chapter 7 in the past, you can only file again if eight years have passed since your first discharge of debts. For a Chapter 13 bankruptcy, you cannot receive a second discharge within two years of the first.
Also, certain debts are not dischargeable, such as child support, student loans, and income taxes. Another factor that can come into play is the cause of your debts. If the bankruptcy court sees that you have a recent history of irresponsible spending, they will likely not discharge your debts. Before starting the process, your attorney can review your history and counsel you on your eligibility.
Kennesaw Bankruptcy Lawyer Near Me (770) 792-1000
Looking to File Bankruptcy? Find a Bankruptcy Attorney To Help You!
Credit card debt, medical bills, garnishments, and other types of financial issues can make daily life not just a chore, but a major hassle. All too quickly, many financially impoverished individuals find themselves without the means to pay even the most basic of bills, putting family members at risk for shelter, food, and other basic necessities.
A bankruptcy can change all that. Bankruptcy offers individuals and families a chance to wipe away nearly all debt once and for all. Depending on the type of bankruptcy you qualify for, your debts could quickly become a thing of the past.
However, once you have made the decision to file for bankruptcy, finding a qualified and experienced attorney in Kennesaw or Acworth can be difficult. How do you know if they have right experience? It is recommended that you speak to least two attorneys about your circumstances and inquire as to whether the attorney specializes in bankruptcy cases.
When you or your family are troubled with financial issues, attempting to understand the complicated process of filing bankruptcy can leave you even more troubled. A skilled and experienced bankruptcy attorney should be able to answer all of your bankruptcy questions and be able to guide through the bankruptcy process without leaving you in a befuddled mess.
Bankruptcy is divided into different categories called Chapters. For individuals and families who wish to file, those categories are called Chapter 7 and Chapter 13. A bankruptcy attorney may specialize in only one or both types of bankruptcies. Your bankruptcy attorney should be well-versed in the laws surrounding the Chapter you are planning to file.
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Bankruptcy Law – General Information
The legal history for bankruptcy dates back to the ancient world. In fact, from a religious perspective, in the Old Testament, every seventh year was decreed Mosaic Law as a Sabbatical year wherein the release of all debts owed by citizens was required. See Leviticus, 25:8-54. Moreover, Deuteronomy 15: 1-3 specifies that “[a]t the end of every seven years you shall grant a remission of debt.”
Originally bankruptcy was intended to be a remedy for creditors during the reign of King Henry VIII. England codified the bankruptcy laws in 1825, but voluntary bankruptcy for debtors was not actually authorized until 1849.
In the United States the legal source for bankruptcy law is the United States Constitution I, Section 8, Clause 4. The bankruptcy code has undergone several revisions with the most recent one being the Bankruptcy Abuse and Consumer Protection Act, which was enacted in October of 2005.
For the vast majority of Americans there are two primary kinds of bankruptcy relief and both are distinct from one another.
Chapter 7 bankruptcy focus on bankruptcy cases in which consumers are allowed to discharge most, if not all, of their debts. A discharge of debts simply means that the client’s debts are legally wiped out.
Not all debts are dischargeable in a Chapter 7 bankruptcy. For example, under the current law, debts such as student loans, certain types of taxes, child support, alimony, and criminal restitution would not be wiped out. However such debts as medical bills, credit card debt, or other general unsecured debts would be wiped clean by filing Chapter 7 with a bankruptcy lawyer.
Chapter 7 bankruptcy usually takes approximately five to six months to complete depending upon where the bankruptcy case has been filed. Usually there is one hearing in a Chapter 7 bankruptcy case. The hearing is presided over by a Chapter 7 trustee. The Chapter 7 trustee’s role is to ensure that the Chapter 7 bankruptcy laws are met. One of the primary considerations in filing a Chapter 7 bankruptcy case is whether the client can meet the Means Test.
Means Testing determines whether a client can meet the legally mandated income requirements to be able to maintain a Chapter 7 bankruptcy case. If the amount of income a client has received in the six (6) months preceding the filing of their Chapter 7 case exceeds the stated median income limits, you may not be able to file a Chapter 7 bankruptcy case.
Under the bankruptcy laws, if it appears that a person does not initially qualify for Chapter 7 bankruptcy certain expenses such as mortgage payments, child support or alimony, and income tax obligations may be used to reduce the amount of median income. Sometimes these expenses are enough to enable a person to qualify to file for Chapter 7 bankruptcy even though initially it appeared that the person would not qualify.
Whether a person files for a Chapter 7 bankruptcy or a Chapter 13 bankruptcy the bankruptcy laws require clients to complete a consumer credit counseling class, oftentimes referred to as a pre-filing certificate. If a bankruptcy case is filed without completing the pre-filing class, the bankruptcy case would be void. In other words, the bankruptcy filing would be legally invalid.
Chapter 13 bankruptcy is an entirely different bankruptcy proceeding. Chapter 13 bankruptcy is known as a wage earner’s repayment plan. Chapter 13 bankruptcy normally has a duration of at least two to five years. There are several legal reasons, which may require that person file for Chapter 13 bankruptcy. The most common reason is that a person may have fallen behind on their mortgage (foreclosure bankruptcy) or vehicle payments and is unable to bring the payments current, or, perhaps the person’s income exceeds the median income limits.
In the above scenario, if a person files a Chapter 13 bankruptcy the client will be allowed to cure the missed payments over time in the bankruptcy case, and, in most cases be allowed to keep the property.
Chapter 13 bankruptcy laws mandate that a client must be able to afford to make the Chapter 13 bankruptcy payment or the case will be dismissed or converted to a Chapter 7 bankruptcy. Statistics show that most of the Chapter 13 bankruptcy cases are dismissed or they are converted to a Chapter 7 bankruptcy proceeding.
If a person files a Chapter 13 bankruptcy case, the regular mortgage payments must be paid to the mortgage company if the client wishes to retain the residence. If the mortgage payments are not made the creditor may file a motion in court asking that they be allowed to obtain legal possession of the property.
As far as rebuilding your credit, it is probably significantly easier to rebuild one’s credit after filing a Chapter 7 bankruptcy versus a Chapter 13 bankruptcy case. In fact, many times even before all of a client’s debts have been wiped out in a Chapter 7 bankruptcy, credit card companies will solicit a client with new credit card offers. However, rebuilding credit in a Chapter 13 bankruptcy case can not begin until the Chapter 13 bankruptcy has been successfully completed which is usually two (2) to five (5) years.
Do I need to hire an attorney to help me file for bankruptcy?
It is theoretically possible to handle your bankruptcy case pro se (by yourself), but it is not recommended. Bankruptcy lawyers can preempt common errors people make during the filing process and can help walk you through the process much more efficiently than you might be able to manage on your own.
There are dozens of forms to complete, each with rather confusing technical legalese. Identifying which forms you need (there are well over 100 federal forms from which to choose), and ensuring each one is filled out accurately and entirely is not an easy feat for non-lawyers. People who file by themselves often make mistakes that are extremely costly. For instance, if you want to keep your home, but inadvertently forget to list your mortgage information on the correct bankruptcy form and do not take the steps necessary to reinstate your mortgage, you could very easily wind up losing your home in the bankruptcy.
Plus, you will have case-specific questions along the way that are best answered by a legal professional. Which of your debts are dischargeable and which are not? How do you handle co-owned property? Should you file alone or with your spouse? These are all topics your attorney can help you with.
In addition to helping draft and file all the necessary documents, your attorney can represent you in bankruptcy court when the trustee reviews your case. Courtrooms can be unnerving, and you will benefit from having an attorney help you prepare and handle the important details during the hearing.