Which Chapter Bankruptcy Is Right For You?

Chapter 7 And Chapter 13 — What's The Difference?

What's the difference between Chapter 7 and Chapter 13 bankruptcy in Atlanta and which one is best for me?

Most bankruptcy cases filed in Georgia by individuals or families are filed as either Chapter 7 liquidation or as Chapter 13 repayment plans.

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, car and other property), and most often file because of credit card debt, judgments or garnishments.

Under current bankruptcy law, you can file Chapter 7 only if your household income is below the average for a family of your size in Georgia. The median income tables are available at the bankruptcy court clerk website. Note that these tables are adjusted every six months, so if your income is close to the limit, it might pay to wait until the new tables come out.

Here are median income figures in Georgia as of 2011. If your income falls below these numbers, you should have no trouble filing Chapter 7.

Atlanta debt relief

Median income figures in Georgia as of April 2011:

  • Individual: $40,670.00 per year
  • Family of two: $53,790.00 per year
  • Family of three: $58,239.00per year
  • Family of four: $70,242.00 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.

View list of credit counseling providers

Chapter 13 - A Court-Supervised Repayment Plan

Chapter 13 is a debt reorganization that makes sense if you are trying to keep everything you own and you are behind on your house payments or if you do not qualify for Chapter 7. Just like in a Chapter 7 case, you must complete prebankruptcy credit counseling before your case can be filed. Chapter 13 is commonly used to stop mortgage foreclosure or vehicle repossession.

Consider Chapter 7 when:

  • You have high credit card balances with no reasonable expectation of paying off these balances.
  • You have high medical bills you cannot pay.
  • Unexpected lawsuit such as repossession deficiency, credit card or old apartment complex
  • You've lost your job and need to downsize your lifestyle.
  • A recent divorce has shrunk your budget.
  • You are under a lot of stress.
  • You want to work for the future and leave the past behind.

Consider Chapter 13 when:

  • You are facing mortgage foreclosure.
  • You are facing car repossession.
  • Your income was interrupted and you need time to catch up.
  • You have too much equity in your house or car to qualify for Chapter 7.
  • You want to try to pay back as much as you can.
  • You need to file for bankruptcy, but cannot qualify under Chapter 7.

Under federal law, we are designated as a debt relief agency. We help people file for bankruptcy under the Bankruptcy Code.