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You are here: HOME>GEORGIA BANKRUPTCY LAW QUESTIONS>TYPES OF BANKRUPTCY

Over 99% of the bankruptcy cases filed in Georgia by individuals or families are filed as either a Chapter 7 liquidation or as a Chapter 13 bill consolidation.

Non-business individuals can file Chapter 11 reorganization but it rarely makes sense to do so because of the cost and complexity.

In general, Chapter 7 bankruptcy makes sense if you want to “start over.”  Chapter 7 debtors usually do not own very much property (although you often can keep your house and car), and frequently 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 Geogia as of February 1, 2008. If you income is less than these numbers, you should have no trouble filing Chapter 7. 

Median Income Figures in Georgia

Individual - $39,171 per year

Family of 2 - $51,425 per year

Family of 3 - $58,885 per year

Family of 4 - $68,611 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

By contrast, Chapter 13 is a personal reorganization that makes sense if you are trying to hang on to 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. Specifically, Chapter 13 is frequently used to stop a 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
   
• you are 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
   
• you are under a lot of stress

As discussed throughout this web site, bankruptcy is a last resort. Before filing bankruptcy, do your own research about non-bankruptcy alternatives. For example, a mortgage delinquency need not always lead to Chapter 13. Sites like mortgagefit.com offer helpful advice, access to mortgage delinquency programs, non-bankruptcy fresh start ideas, and discussion boards that will help you consider non-bankruptcy alternatives.
 

Depending on the circumstances, Chapter 7 or Chapter 13 can also be used to modify or eliminate IRS and other tax obligations, student loans and judgment debts. Please fill out my Georgia bankruptcy law new client questionnaire, fax it to me at 770-234-5434 and I’d be happy to schedule an appointment to give you my analysis.

This website copyright 2008 by Ginsberg Law Offices, P.C. All rights reserved. No reproduction of the original content on this site without express permission of the site owner. Please direct inquiries to Jonathan Ginsberg, Ginsberg Law Offices, 1854 Independence Square, Atlanta, GA 30338.