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Most of the bankruptcy cases filed in Georgia by individuals or families are filed as either Chapter 7 liquidation or as Chapter 13 Bill Consolidation.
In general, Chapter 7 bankruptcy makes sense if you want to “start over.” Chapter 7 debtors usually do not own much property (although you often can keep your house and car), and often file because of credit card debt.
Under the current bankruptcy law, you can only file Chapter 7 if your household income is below the average household income for a family of your size in Georgia. The “median income” tables are available at the Bankruptcy Court clerk web site. Note that these tables are adjusted every 6 months, so if your income is close to the limit, it might pay to wait until the new tables come out.
Here are some examples of median income figures in Georgia as of October 2006. If your income is less than these numbers, you should have no trouble filing Chapter 7.
Median Income Figures in Georgia
- Individual: $37,588 per year
- Family of two: $50,376 per year
- Family of three: $55,293 per year
- Family of four: $66,508 per year
If your income is higher than these numbers, we have to run your budget through a second test called the “means test.”
In addition, prior to filing bankruptcy, you are now required to complete a credit counseling session with an approved credit counseling service. This credit counseling session can be taken online if you wish.
Chapter 13 - A Court Supervised Repayment Plan
Chapter 13 is a personal reorganization that makes sense if you are trying to keep everything you own, or if you do not qualify for Chapter 7. You still must undergo pre-bankruptcy credit counseling prior to filing Chapter 13. Chapter 13 is commonly used to stop mortgage foreclosure or vehicle repossession.
Consider Chapter 7 when:
- High credit card balances with no reasonable expectation to pay these bills in a reasonable time
- High medical bills you cannot pay
- Unexpected lawsuit such as repossession deficiency, credit card or old apartment complex
- Loss of job and need to downsize lifestyle
- Recent divorce has damaged budget
- Under a lot of stress
Consider Chapter 13 when:
- Facing mortgage foreclosure
- Facing car repossession
- Had income interruption and now need time to catch up
- Have too much equity in house or car to qualify for Chapter 7
- Want to try to pay back as much as you can
- You need to file for bankruptcy but cannot qualify under Chapter 7
- Under a lot of stress