IN ROSWELL, ATLANTA OR SANDY SPRINGS, GEORGIA
Do you have a job, but feel financially crippled by outstanding debt? Let Galler Law, LLC provide you with helpful solutions and intelligent guidance related to your financial liabilities. Our Georgia Chapter 13 lawyers can explain the benefits and drawbacks of filing for Chapter 13 bankruptcy.
To qualify for Chapter 13 bankruptcy, you must have an ongoing form of income, as well as enough disposable income to keep up with an ongoing repayment plan. Lasting between three and five years, your repayment agreement will pay your creditors back gradually. Afterward, all dischargeable debt will be eliminated.
You can file bankruptcy either under Chapter 7 or Chapter 13 (subject to conditions). In Chapter 7 bankruptcy, the court-appointed trustee sells the debtor’s assets to pay off the creditors. However, in Chapter 13 bankruptcy, there is no outright sale of debtor’s property. Instead, the debtor is allowed to set up a payment plan with the trustee to pay back debt over a period of laid downtime.
What is Chapter 13 bankruptcy?
If you are considering filing for bankruptcy, you can do so under Chapter 13 bankruptcy, variously known as ‘wage earner’s plan,’ ‘individual debt adjustment,’ ‘individual debt consolidation’ or ‘repayment plan,’ depending upon your eligibility. If you have a regular income, a Chapter 13 bankruptcy enables you to develop a plan to repay all or part of your debts.
Under Chapter 13 bankruptcy, you get three years to repay, if your monthly income is less than the state median and five years if it is more. In no case, can you extend the repayment plan to more than five years.
Who can file under Chapter 13 bankruptcy?
You can file chapter 13 bankruptcy if you
…wish to keep the mortgaged property and need time to bring the debt to a manageable level by restructuring payment.
…have not qualified for a Chapter 7 bankruptcy under the ‘means test’.
…want to avoid foreclosure for missed house payments by making up for it.
…want to take advantage of the flexibility of a Chapter 13 plan in obtaining a discharge of debts that are not dischargeable in a Chapter 7 plan.
…have recently filed a Chapter 7 case, thereby becoming ineligible for another discharge.
…want to strip a junior lien from their residence.
Are you eligible to file Chapter 13 bankruptcy in Georgia?
In Georgia, you can file a Chapter 13 bankruptcy for personal bankruptcy and not as a business. Let us see the eligibility criteria:
● Passing the ‘means test’: This test determines your disposable income, based on your household income as compared to the median income of the state.
Disposable Income = Total monthly income – Regular and necessary expenses
The regular and necessary expenses may include groceries, utilities, house payments, rent, insurance, car payments, medical fees, and education and child care expenses.
● Income exceeds household expenses: If your income exceeds household expenses, you become eligible for filing a Chapter 13 bankruptcy. Income under Chapter 13 means wages from employment, earnings from self-employment, income from interests, pension income, social security, disability benefits and any other source of steady income. You can also consider the monetary contributions of family members or friends as income.
● Prior dismissal: If you have filed for a Chapter 13 bankruptcy in the last 180 days and it has been dismissed, you become ineligible for filing. The dismissal may be due to your willful failure to appear before the court or due to non-compliance with court orders. It may also get voluntarily dismissed if the creditors approach the bankruptcy court for recovery of your property on which they hold liens.
● Debts exceeding limits: If your secured debts exceed $1,149,525 and unsecured debts exceed $383,175, you don’t qualify for filing a Chapter 13 bankruptcy. Debt guaranteed against collateral is called a secured debt. In case of failure to pay back the debt, the creditor can utilize the collateral to realize the loan. Unsecured debt, on the other hand, has no collateral. This includes medical bills, student loans, and credit card bills.
Eligibility requirements to file Chapter 13
You can take undermentioned steps to prove your eligibility:
● Attenda Georgia bankruptcy trustee approved 341 meeting of creditors.
● Give evidence of reliable income by submitting your W-2 or 1040 income tax return.
● Prove that your secured and unsecured debts are within the legal limits.
● Confirm you have not filed a Chapter 7 bankruptcy in the last four years or Chapter 13 bankruptcy in the last two.
How to file bankruptcy with the help of a Chapter 13 bankruptcy attorney
You can file a Chapter 13 bankruptcy case with the bankruptcy court serving the area of your domicile or residence. There are three different bankruptcy district courts in Georgia –
- the Georgia Middle District Court,
- the Georgia Southern District Court and
- the Georgia Northern District Court.
The Georgia Northern District Court takes care of all cases pertaining to Atlanta.
● Documents you have to submit
○ A schedule of current income and expenditures.
○ Schedules of assets and liabilities.
○ A schedule of unexpired leases and executory contracts.
○ Statement of financial affairs.
○ Certificate of credit counseling.
○ Debt repayment plan, if developed through credit counseling.
○ Proof of any payment received from employers 60 days before filing.
○ Monthly income statement.
○ The holding of any federal or state qualified education or tuition accounts
Also, you need to provide your latest copy of tax return, returns for prior years and also those filed during the case.
● Information you have to furnish
○ List of all your creditors and how much you owe them.
○ Your income source, frequency and amount.
○ List of properties you own.
○ List of your monthly living expenses.
Once you have proved your eligibility and have submitted required documents, the court will work out a repayment plan for you. Based on your income, your repayment plan will either run for three or five years.
It is in your interest to faithfully remit your monthly payments since the court discharges any remaining debts, which can be substantial. What’s more, once the repayment plan is put into action, your creditors cannot charge interest on your debts. You only need to pay off the principal balance of each debt and finish the repayment process quickly.
○ Protects your house: Under Chapter 13 bankruptcy plan, your home comes under the protection of the US bankruptcy court. It stops foreclosures and also prevents your creditors from repossessing your car.
○ Creditors not allowed to harass: Law prohibits creditors from contacting you in any manner for repayment of the loan. This period may last from 36 to 60 months. In case you receive any calls from your creditors, you can report them or contact them through your attorney.
○ Eliminates Second and third mortgages: If you owe more on your mortgages than your house is worth, Chapter 13 bankruptcy can save you from second and third mortgages. It helps to convert second and third mortgages from secured debts to unsecured debts. And bankruptcy Chapter 13 gives last priority to unsecured debts, and you can cover it through your payment plan. .
Chapter 13 repayment plan
In the absence of any set amount, it is up to the bankruptcy court to decide what amount you have to pay in a Chapter 13 case. You need to pay ‘priority debts’ in full. These include alimony, child support, and tax obligations. You have to regularly pay for secured debts, such as car loans and mortgages.
As regards unsecured debts, you may pay back anywhere from zero percent to 100 percent, depending on the amount of your disposable income at the end of each month. What’s heartening is your monthly payments on unsecured debt don’t go up, whether you have a $20,000 or $220,000 credit card debt. The monthly payment plan remains the same.
As far as car loans are concerned, you can lower the interest rate or even the balance on your car under Chapter 13. This is because the bankruptcy law lets you pay only the fair market value of your car if you have purchased it more than 910 days before filing for bankruptcy. In case, it is less than 910 days; you can pay lower interest rate than what you were paying before.
In Georgia, the current rate of interest on cars is 5.25 percent. Georgia bankruptcy courts permit you to pay to car creditors the prime interest rate on the day of filing plus two percent as a reasonable interest.
Payment of funds to the trustee
In Georgia, the funds are automatically deducted from your paychecks and paid to the Chapter 13 trustee, unless you are self-employed. Some part of this fund goes as trustee’s commission. The remaining funds are distributed among the creditors, based on the terms of the confirmed Chapter 13 plan.
You may also resort to payments ‘outside the plan’. This constitutes monthly regular payments on house and vehicle, domestic support obligations, student loans and the like.
Failure to make scheduled Chapter 13 payments
It is best not to miss out on scheduled Chapter 13 bankruptcy payments. But, if you do, take a quick action to remedy the situation. This is because the trustee or one of your creditors may file a motion to dismiss the case.
In such a situation, you need to file a written response to the motion. Failure to do so may compel the court to grant dismissal of the case without a hearing.
The Chapter 13 discharge
The Chapter 13 bankruptcy discharge process is a complex process and has undergone some recent changes. You need to take the services of a competent Chapter 13 bankruptcy attorney prior to filing for bankruptcy.
Once the bankruptcy court grants a Chapter 13 discharge, you will be released from all debts provided by the plan, with limited exceptions. This also frees you from the legal actions of your creditors. Debts not discharged in Chapter 13, include long-term obligations, such as home mortgage, alimony, child support, etc.
The whole process of filing for a Chapter 13 bankruptcy is complex and requires hiring an attorney.
Doing without one to save on legal fees is ill advised, since there are many hurdles to be crossed and one mistake can really spoil your case.
One of the leading law firms of Georgia, GallerLaw, under the stewardship of David Galler, has a battery of competent bankruptcy attorneys.
Gallerlaw remains committed to delivering relief to Georgia clients at minimum expense.
Obviously, a Chapter 13 bankruptcy doesn’t eliminate your debt like in a Chapter 7. However, some of the benefits include:
- You’ll avoiding foreclosure on your home.
- You’ll have the opportunity to make up missed auto or home payments.
- You’ll have the opportunity to repay back taxes.
Let our Georgia foreclosure defense attorneys streamline the bankruptcy process for you.
FIND AN EFFECTIVE SOLUTION FOR TAX AND BANKRUPTCY ISSUES
Galler Law will walk you through the process of filing for Chapter 13 bankruptcy in Roswell, Atlanta or Sandy Springs, Georgia. Our legal team will assist with your paperwork, court filings, income declarations and more.
Call 770-671-8830 to learn more about our debt settlement services.