Georgia Bankruptcy Laws
Bankruptcy was created to help individuals who are overly consumed to
relinquish their excess debt. However this is only for those who have
entered debt out of necessity. These include those who have recently
divorced, those who have lost employment, those who have illnesses
requiring hospitalization, and those who have lost major clients during
Bankruptcy is often abused by those with excess consumer debt, so the
government installed new bankruptcy acts to inhibit abuse. The 2005
Bankruptcy Act increased the monthly payments for Chapter Thirteen
bankruptcy and also increased the difficulty of achieving Chapter Seven
bankruptcy. Other abuse and prevention acts make access to Georgia
bankruptcy courts more difficult.
The 2005 Bankruptcy Act also requires individuals to attend credit
counseling at least six month before applying for bankruptcy. After the
bankruptcy process is complete, individuals are also required to attend
a financial management course.
All those filing for bankruptcy are required to submit to a means test.
This test will compare an individual's expenses and income to the
median income and expenses of the state of Georgia's residents. Falling
below the median will result in Chapter Seven bankruptcy eligibility
and coming above the median will result in Chapter Thirteen bankruptcy
Chapter Thirteen Bankruptcy
Chapter Thirteen bankruptcy allows individuals to eliminate their
excess debt by paying off creditors with their own income. The court
will evaluate an individual's expenses, income, debts, and living
situation before assigning a personal payment plan. This repayment plan
will designate how much is needed to be paid each month in order to
eliminate all debts in a maximum of five years.
A Chapter Thirteen plan can allow an individual to submit these
payments monthly him or herself or the payments can automatically be
withdrawn each month from his or her banking account. Payments can also
be taken automatically from an individual's wages.
Chapter Seven Bankruptcy
Chapter Seven bankruptcy allows individuals to eliminate their debt
through the liquidation of personal property. The court will assign a
bankruptcy trustee to the case who will liquidate the non-exempt
property. All properties will be liquidated for their current values
rather than the values for which they were purchased.
The funds obtained will then be used to pay off creditors after the
trustee receives payment through the compensation. Not all property can
be liquidated. All property is broken into exempt properties and
non-exempt properties. Exempt property can include motor vehicles,
homes, some forms of real estate, furniture, insurance, pensions,
books, clothing, appliances, and other forms of property under a
certain value. If an individual desires to keep a non-exempt property,
he or she is required to purchase the property for the value for which
it would otherwise have been sold.
After an individual has filed his or her bankruptcy paperwork, an
automatic stay will go into effect. This stay will disallow creditors
from contacting him or her for debt reasons. All foreclosures will also
be halted. In order for this automatic stay to remain constant, an
individual who has filed for Chapter Thirteen bankruptcy must begin
making his or her payments.