Chapter 7 Bankruptcy

What is Chapter 7 Bankruptcy?

Chapter 7 provides immediate relief for those who are having trouble paying off unsecured debts such as medical bills, credit card bills, guaranteed company debt, and certain tax obligations. When you file your Chapter 7 bankruptcy case, the automatic stay comes into effect, prohibiting collection actions by creditors against you. In the majority of cases, our clients receive a Chapter 7 bankruptcy discharge approximately four to six months after we file your case, which will relieve you of any personal responsibility on most debts and prevent creditors from contacting you in the future regarding those debts.

Chapter 7 Bankruptcy Means Test

The 2005 revisions to the Bankruptcy Code created new barriers to obtain a Chapter 7 discharge. The “Means Test” is used to see whether or not a debtor has the financial means to pay his or her obligations. You are presumed to pass the means test and be eligible to file bankruptcy if your income falls below the median income for your state. If you make more than the median income, an Atlanta chapter 7 bankruptcy attorney can assist you by combatting the notion that you are ineligible to file. This can be done by deducting certain expenses and payments to demonstrate that you should be able to take advantage of Chapter 7 bankruptcy rather than being compelled into a Chapter 13 bankruptcy repayment plan. If your debts are mostly business or commercial related, the means test does not apply, and you may file a Chapter 7 bankruptcy regardless of your earnings.

How Does the Means Test Work?

The Means Test is applied the same way regardless of whether you file your Chapter 7 bankruptcy case in Atlanta, Georgia or anywhere else in the country. It’s a complicated equation that takes into account your income against the median income for comparable-sized households in your county.

• A Presumption of Abuse Arises or,
• A Presumption of Abuse Does NOT Arise

The first step in the means test is to figure out your household size. Your household size is determined by how many people live in your home (excluding roommates and non-dependents). College-age children may still be considered dependents if they continue to live at home, but any income they bring into the household will be considered household income. For example, if your monthly income is $2,000 and you have four persons in your home: two adults and two children who live under the age of 18, you would use the gross income for each person filing bankruptcy, as well as any other members of the household for the previous six months. This is intended to capture a yearly income average, especially if you get bonuses at certain times of the year.

If your household’s average income for the previous six months is less than the median income of the county where you live in Georgia, you pass the means test and there is no presumption that you are abusing the bankruptcy process. However, if your earnings are higher than the median income, you are presumed to be abusing the bankruptcy process and should consult with an experienced Chapter 7 bankruptcy lawyer to see if any deductions can be taken to rebut the presumption of abuse.

Business Debts and the Means Test

Small business owners facing financial difficulties frequently have debt that excludes them from the Means Test. This allows people who may not otherwise qualify for chapter 7 bankruptcy to file chapter 7 bankruptcy. This is because business related debts can quickly become large if you have a personal guarantee on business loans, business credit card debt, and other business related debts that you are liable for.

Because business debts may exclude you from the Means Test, it is important to talk with an experienced chapter 7 bankruptcy lawyer to determine if such debts may allow you to file a chapter 7 bankruptcy. Chapter 7 bankruptcy is frequently more cost efficient and less time consuming than a chapter 13 bankruptcy.

Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a three-to-five-year repayment plan overseen by a chapter 13 trustee and designed to pay creditors over time. While a chapter 13 bankruptcy can help protect certain assets, most people want to avoid the lengthy obligations involved with a chapter 13 bankruptcy. The experienced bankruptcy attorneys at Robl & Bowen will work with you to keep you eligible for a chapter 7 bankruptcy while still protecting your assets.

Chapter 13 Bankruptcy vs. Subchapter V Bankruptcy

An alternative to chapter 13 bankruptcy available to those with business debts who do not qualify for chapter 7 bankruptcy is known as a subchapter “V” (or subchapter “five”) bankruptcy. A subchapter V bankruptcy is similar to a chapter 13 bankruptcy, as you will pay through a repayment plan over time. However, a subchapter V bankruptcy is designed to assist those with business debts reorganize these debts in ways that a chapter 13 bankruptcy is unable to. Please read more about subchapter V bankruptcy here.

What to Expect When Filing for Chapter 7 Bankruptcy in Atlanta

Before filing your case, you will work closely with your experienced Robl & Bowen chapter 7 bankruptcy attorney to draft your bankruptcy petition, schedules, and statement of financial affairs. You will also need to complete your pre-chapter 7 bankruptcy credit counseling course requirement. We can provide you with several options of approved providers.

As soon as your Atlanta chapter 7 bankruptcy attorney files your case with the court, the automatic stay will come into force. The bankruptcy code imposes the automatic stay and compels debt collectors to cease all collection efforts. This includes halting any lawsuits, wage garnishment operations, judgment collections, and obnoxious phone calls or letters.

After filing your chapter 7 bankruptcy, your Atlanta bankruptcy lawyer will receive a case number. About 40 days after you file your case, you will be required to attend a “341 meeting.” A trustee appointed to oversee your case will ask questions regarding your petition and debts during this session. After the meeting, the chapter 7 bankruptcy trustee will investigate any possible assets for distribution to creditors. It usually takes anywhere from six to eight weeks for the investigation. Once the chapter 7 bankruptcy trustee has finished, he or she will enter a report indicating whether any assets are available to be distributed to creditors.

Although most obligations can be erased in Chapter 7 bankruptcy, certain debts are not eligible to be discharged. Some of these non-dischargeable debts include the following:

• Alimony
• Child support
• Recent income tax debt
• Student loans
• Debts incurred by fraud
• Criminal restitution

Debt management is a stressful and anxiety-provoking experience for individuals and their families. Chapter 7 bankruptcy may help you get back on track financially by wiping away credit card debts while also freeing up money that can be used to pay down your mortgage or automobile payments. For more information about filing for bankruptcy, contact our Atlanta chapter 7 bankruptcy attorney at Robl & Bowen today.

Filing Bankruptcy for Businesses

Most people are not aware that a business can file for chapter 7 bankruptcy. If you are seeking to shut down a business, have a business that is being subject to numerous lawsuits, or have a business that is struggling due to aggressive creditors, a chapter 7 bankruptcy for the business can assist in dealing with creditors.

A chapter 7 business bankruptcy is still able to take advantage of the automatic stay, which prevents creditors from taking further action against the business. A business is also not subject to the Means Test, which makes a chapter 7 business bankruptcy an attractive option for a business looking to close but not be subject to many lawsuits from creditors.

The experienced Atlanta attorneys at Robl & Bowen can assist your business in navigating a chapter 7 business bankruptcy. This includes working to create the bankruptcy petition, schedules, statement of financial affairs; attending the 341 meeting with you; and helping you navigate the chapter 7 trustee’s investigations.

Frequently Asked Questions

Can I Keep My Property After Chapter 7 Bankruptcy?

One of the most common misunderstandings about Chapter 7 bankruptcy is that you will lose everything, but this isn’t the case. In fact, you may be able to keep your home and automobile in certain situations. Georgia law provides for numerous “exemptions” you can use to protect your assets from the chapter 7 bankruptcy trustee and creditors. The chapter 7 bankruptcy attorneys at Robl & Bowen can help you use these exemptions to safeguard your assets from being liquidated by the trustee.

Unfortunately, people who file their chapter 7 bankruptcy without an experienced Atlanta bankruptcy attorney frequently do not correctly use their exemptions and fail to have their assets properly protected. With an experienced Robl & Bowen attorney at your side, we will help you navigate applying exemptions to your assets.

The easiest way to file Chapter 7 bankruptcy is by simply listing all of your assets on your bankruptcy schedules. However, using exemptions correctly is one of the more difficult aspects of bankruptcy law and the main reason why individuals who do not seek experienced legal assistance regret filing for bankruptcy. Your Chapter 7 trustee will generally just care about a few sorts of assets: houses with significant equity, luxury vehicles with substantial equity, cash in deposit accounts, publicly listed shares, and cryptocurrency. The majority of people, including those with six-figure salaries, lack significant equity in their houses or automobiles for a trustee to sell and do not have cash or money in deposit accounts above what is permissible under Georgia law.

What are the Benefits of Filing for Chapter 7 Bankruptcy in Georgia?

Chapter 7 bankruptcy in Georgia is a legal financial option that may assist you in eliminating debt and getting back on track with your finances. Individuals who meet the requirements for a Chapter 7 bankruptcy are able to get rid of the vast majority of their obligations, such as:

• Medical bills
• Credit card balances
• Unsecured personal loans

Another advantage is that Chapter 7 bankruptcy law offers a significant property and personal belongings exemption. Depending on the amount of equity in your house and the state of your mortgage, you may not be required to sell it.

A further advantage is the automatic stay, which can prevent creditors — such as collections companies — from taking actions against you while you reorganize your finances and assets in bankruptcy. The automatic stay is one of the most powerful tools an individual has in the bankruptcy process.

Will My Credit Be Ruined After Chapter 7 Bankruptcy?

Many people believe that by filing a Chapter 7 bankruptcy, their credit will be ruined for years. This notion is completely untrue. The economy in the United States is based on credit, and the majority of people are able to start rebuilding their credit right away after their Chapter 7 bankruptcy is completed. In fact, many are able to purchase a home within 12-18 months of receiving a Chapter 7 discharge in Georgia. A Chapter 7 bankruptcy in Georgia takes an average of four to six months to complete. The majority of clients get a discharge around four to six months after filing.

What is the Difference Between the Chapter 7 Trustee and the United States Trustee’s Office?

The Chapter 7 trustee is a private attorney or accountant appointed to oversee your chapter 7 bankruptcy case as it progresses. The chapter 7 trustee will ask questions at the 341 meeting of creditors, investigate your assets and financial condition, and processes your case so that you can receive your discharge.

The United States Trustee’s Office is a government office that is an arm of the Department of Justice. They are responsible for overseeing enforcement of various bankruptcy laws and rules, and monitor cases for abusive conduct.

While a chapter 7 trustee is appointed in every chapter 7 bankruptcy case, it is uncommon for the United States Trustee’s Office to become involved in a chapter 7 bankruptcy unless there is some abusive conduct occurring. In that event, the experienced Atlanta attorneys at Robl & Bowen will be able to advise and assist you in dealing with the United States Trustee’s Office.

Contact An Atlanta Chapter 7 Bankruptcy Attorney Today

Debt problems can take the enjoyment out of life. All of us do our best to fulfill our obligations, but sometimes our best efforts fail. That’s when it’s time to take a step back and examine other options. An experienced Atlanta Chapter 7 bankruptcy attorney may evaluate your legal possibilities with you and assist you in creating a path forward. It’s possible that the time has come to start fresh. At Robl & Bowen, we are dedicated to making bankruptcy more accessible. Call us at (404) 373-5180 to learn more about how our Chapter 7 bankruptcy lawyer can assist you in taking your first step toward a brighter future.