In Georgia, like in many other US states, it is mandatory to pass the means test, in case you have filed a Chapter 7 bankruptcy. However, this test is only compulsory, if you have an income that is above the Georgia median. On the contrary, you are exempted from bankruptcy means test Georgia, if your income remains below the median for your household size. In this case, you can file a Chapter 7 bankruptcy.
Bankruptcy means test Georgia exemptions
There are many exemptions under Georgia Chapter 7 exemptions, such as exemptions on car, clothing, household goods, jewelry, cash, and retirement. However, there are various conditions in which you can be exempted from the means test.
You are exempted from bankruptcy means test in Georgia under the following conditions:
- Your debts are not primarily consumer debts, and
- You are a disabled veteran and
- Incurred your debt during active military service
Georgia median income
As already mentioned, you are only eligible to file a Chapter 7 bankruptcy in Georgia, if your monthly household income is less than the Georgia median income. But, what is this median income?
A median income for a household is a figure obtained by averaging your monthly household income of the last six months. Multiply this value by 12 to determine your annual income. If this is over the median income limit, as fixed by the Georgia state, this means your income has reduced over the past 6 months.
This entails waiting one or more months, till it comes under the Georgia median level. If you don’t qualify according to your income of the past six months, waiting for some more months may keep your income below the average monthly income of your state and qualify you.
Effect of the number of household members
The number of members in a household has a direct bearing on the median income figure. Even though you cannot include your roommate as a member household, the portion the income that he or she contributes to the overall income of the household will be included.
In such a scenario, you need to fill out Form B122A-2 (Expense Deductions), in case your six-month household income stands more than Georgia’s median income for a household your size. The good part is you may still qualify for Chapter 7. Although filling out this form is not legally binding, the ‘expenses’ part gives the judge or trustee a fair idea about your ability to pay.
In case your six-month household income turns out to be less than the Georgia median, your first action is to compute your income and complete Form B122A-1 accurately. There is no hard and fast rule for a judge to determine your ability to pay.
Some judges look at the ‘totality of circumstances’ and may disallow you from filing Chapter 7 bankruptcy, whether your income is above or below the median. Still, others rely on different forms filled by you as guides, specifically Form B 106, Schedules I and J. although these forms deal with income and expenses, they can provide a different ‘disposable income’ result. This is because different things are allowed and excluded on each form.
Social Security Benefits
For example, income from Social Security benefits is excluded from the means test income formula, but is included in Schedule I. Whether this may or may not bar you from filing Chapter 7 bankruptcy is still debatable and open to interpretation, but it still must be stated in Schedule I. So, tread carefully, if you have a sizeable income from Social Security benefits.
Thus, your best course of action is :
- Determine what income is left over after expenses AND
- View the list of allowed expenses given in the means test form and fill in that application.
Bankruptcy Means test Georgia: How to evaluate
The means test is a must if your income is above the Georgia median income for a household your size. In this, you need to calculate your earnings and expenditure details through Chapter 7 means test calculator. This requires scrutiny of your financial records. These may include:
- Your current monthly income.
- Business income.
- Rental income.
- Interests and dividends.
- Pensions and retirement plans.
- Unemployment income.
- Contribution of others in your household expenses.
You can glean much of this information from the United States Census Bureau and the IRS, since these are based on national, Georgia and local averages and standards. This excludes some real expenditure that you are legally allowed to pay and those required for health and wellbeing.
Once you have gathered all the information from various sources, deduct all of your permitted expenditures for Georgia from your income. This will give you the amount of income you have to pay your unsecured creditors under the bankruptcy law in Chapter 13 (wage earner’s plan).
Is going in for Chapter 7 bankruptcy a must?
Not exactly. Just because you become eligible to file a Chapter 7, doesn’t mean that you should. It works well if you are desirous of keeping your secured property, such as a home with a mortgage. Otherwise, your attorney is the best person to determine what your best options and courses of action are.
- What is the maximum income for Chapter 7?
In Georgia, the maximum income for Chapter 7is $12,475. If it goes over, you fail bankruptcy means test Georgia and forgo the choice of filing a Chapter 7
- How much does it cost to file bankruptcy in Georgia?
Federal laws and the court system determine the bankruptcy fees. Hence, there is no variation in the costs among the states, including Georgia, for filing for bankruptcy. For Chapter 7 bankruptcy, the fee is $335, and for Chapter 13, it is $310. In case you are unable to pay this amount, you can seek the court’s permission to pay in four instalments. Under Chapter 7, bankruptcy court can waive off the fees entirely.
- What is Chapter 7 bankruptcy in Georgia?
Chapter 7 bankruptcy is a liquidation bankruptcy that helps in wiping out most of your unsecured debts. In Georgia, you cannot file for Chapter 7 bankruptcy, if you had filed for it less than eight years ago. Also, you must have passed the means test.
Of all the states in the US, Georgia is one that has differing laws for filing for bankruptcy. If you are a resident of the state, it is better to get acquainted with the bankruptcy laws. Or better still; hire a competent and experienced bankruptcy lawyer from the state.
David Galler is an experienced bankruptcy attorney based in Atlanta, Georgia. For the last 29 years he has filed over 10,000 bankruptcy cases. He has a FIVE STAR client rating on Avvo, Kudzu.com, RateABiz.com, and Google+, among other sites. Over 99% of all Chapter 7 cases he filed have been discharged.