There are several debt relief options under the bankruptcy code. Each has a different purpose and is found at its own location under federal law. Chapter 7 is one option and is found at 11 U.S.C. 701. It is also known as a “liquidation bankruptcy”. When a case is filed, you become “the debtor”. All assets and all debts are identified and revealed on your petition and statement of financial affairs. The petition is signed under oath, meaning you swear the information is true and there are no errors, omissions, or changes.
Georgia law permits you to keep (exempt) items under your homestead exemption. Most of debtor’s assets are within the limits of what can be kept. A complete list of what you may keep is found at the Official Code of Georgia Annotated, O.C.G.A. 44-13-100. If your assets exceed the allowed exemption, the trustee may sell those assets and pay your creditors. Over 90% of chapter 7 cases are no-asset cases, meaning the debtor keeps all assets.
You may choose which debts you want to pay. For example, if you want to keep your car, and the loan is current, you may reaffirm the debt and make the payment. At the end of the payment time, you get the title. The same is true for houses and other secured claims. You may decide not to keep certain assets. You can abandon those assets and not pay any balance on the account. Most debts are forgiven (discharged). Examples of discharged debts include, but are not limited to medical bills, credit card bills, open accounts, and unsecured loans.
Some are not:
Alimony, child support;
Federal and State Income Taxes;
Debts incurred through fraud;
Debts for intentional or malicious injury to a person or property;
Certain fines and penalties;
Most educational and student loans;
Debts not discharged in a previous bankruptcy.
At the end, usually within six months after filing, a court order is sent to all interested parties that the debts are discharged and the case is closed.
11 Important Facts in Every Chapter 7 Bankruptcy:
- The filing fee to the United States Bankruptcy Clerk is $335.00.
- If you cannot pay the fee in full, the Court may allow installment payments, usually up to four payments of $83.75 per month.
- It is free to sign up to receive electronic notices from the Clerk’s office. You can keep up with every document filed in your case.
- The usual case lasts six months from filing to discharge and final decree.
- You will likely never meet the Judge, but you will meet the Chapter 7 Trustee appointed to your case.
- You meet the Trustee at the first meeting of creditors.
- Be sure your attorney provided the Trustee with your last filed tax return. If you don’t file tax returns, tell the trustee at the meeting.
- The Trustee asks routine questions you will already know the answers to.
- Always bring your drivers license to the meeting and your Social Security card. If you don’t have a Social Security card, the trustee will accept a W-2 form, medical insurance card, pay stub, IRS Form 1099, and Social Security Administration Statement (SSA). Failure to bring these documents results in your meeting being continued and you may need to return. The Trustee may not accept your tax return as proof of your social security number.
- The Trustee will review your driver’s license and social security card and compare that information to what is in your petition. Any errors must be corrected immediately.
- Creditors may appear at the meeting and ask questions. Few creditors attend and those who do usually represent finance companies or furniture companies and want to know if you still have the items you bought.
- When the meeting is over, you may go.
8 Reasons Not to File A Chapter 7 Bankruptcy
- If you filed a Chapter 7 bankruptcy within the last eight years and received a discharge, you must wait eight years after the last filing to file another chapter 7 to receive a discharge.
- If you have concealed, transferred, or destroyed property intending to defraud your creditors.
- If all of your debt is not dischargeable, like taxes, student loans, and domestic support obligations (alimony, child support, separate maintenance).
- If you have concealed, destroyed, or falsified records of your financial transactions.
- If you can’t explain the loss of your assets.
- If you are not willing to truthfully answer questions about your financial situation or obey orders of the Bankruptcy Judge.
- If you failed to complete the required instructional course on personal financial management.
- If you have too much disposable income, you may be forced into a chapter 13 to repay creditors.