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Atlanta Bankruptcy Law Blog

Saving the home is a common reason for Chapter 13 bankruptcy

People file for bankruptcy for a lot of different reasons, including credit card debt, unexpected medical bills, failed business ventures and more. One of the most common reasons for Chapter 13 bankruptcy, though, is because people are trying to stop foreclosure and save their homes.

Chapter 13 can help if your home is being foreclosed on in a few ways. First off, it's generally going to put an automatic stay on the foreclosure lawsuit being carried out by the lender. That suit has to wait for the bankruptcy lawsuit to conclude. It can take months for that to happen, so, at the very least, you get a few more months in your house while everything goes through the court.

Does secured debt have to be paid in Chapter 13?

Chapter 13 bankruptcy utilizes a repayment plan. As such, you're still going to be obligated to pay off a lot of what you owe. It's not a way to instantly eliminate the debt, but to make it manageable and affordable over time.

Secured debt is especially important, as the full value has to be paid over the course of the plan. Non-secured debt will have to be paid in part, but you typically just need to pay as much as the total calculated value of the nonexempt property that you own. The amount, of course, varies from one case to the next.

Bankruptcy doesn't discharge every debt you have

Some people think of bankruptcy as a way to quickly wipe the slate clean, eliminating all debt in one quick move so that nothing is owed. This can happen, but only if you have the right types of debt. Bankruptcy doesn't always get rid of everything.

For instance, student loans often can't be eliminated. There are cases where you can have the student loan debt declared an undo hardship, and then it can be waived, but this doesn't happen in most cases.

Creditor harassment is illegal, even if you do owe

Creditors can come after you when you owe money, and they can ask you to pay. However, that does not mean they can harass you. This is illegal under the Fair Debt Collection Practices Act as addressed by the Consumer Financial Protection Bureau.

So, what is the difference between harassment and a simple request? One thing to consider is repetition. If they call you once and tell you what you owe, asking for payment, that's fine. If they call you three times a day, that's harassment.

Georgia counties show frequent bankruptcy filings

A recent study was conducted to examine bankruptcy rates across the United States. Among other things, it found that many counties in Georgia are still struggling with bankruptcy, despite declining rates on a nationwide basis.

The study, which looked at how many people in each country had filed for bankruptcy per 100,000 people, thus making the rates even everywhere, examined data from 587 different counties. It then ranked them based on where bankruptcy was the most common, ultimately compiling a list of the 30 counties with the highest bankruptcy rates. Keep in mind that this was for the whole country. Even so, a full 10 of those 30 counties at the top of the list were in Georgia.

What is the main reason people file for bankruptcy?

People file for bankruptcy for a lot of reasons, and there is sometimes the assumption that irresponsible spending was involved. However, this is not nearly as common as people may assume. Studies have actually shown that the No. 1 cause of personal bankruptcy in the United States is something you may not be able to avoid: Medical debt.

You may think that avoiding medical debt is as simple as having insurance, but that's not always the case. For example, a man knew he needed to go in for a herniated-disk surgery. He also knew it would be expensive. He'd need to pay $4,300 for the anesthesiologist, $56,000 for the main hospital bill, and $133,000 for the orthopedist. He was prepared. He'd negotiated the prices and made sure the things he wasn't covering himself were covered by his in-network insurance.

Is Chapter 7 or Chapter 13 best for you?

The main types of bankruptcy that can be filed for by individuals in Georgia are Chapter 7 bankruptcy and Chapter 13 bankruptcy. If you've never used bankruptcy before, you need to know the key differences to decide which one is right for you. They both offer advantages and disadvantages, and every situation is different.

With Chapter 7 bankruptcy, your non-exempt assets are going to be liquidated or sold. The money generated is then given to the creditors to pay off as much of what is owed as possible.

Showing that student debt is an undue hardship

Generally speaking, you can't get rid of student loan debt if you declare bankruptcy. However, there is one way to do this, and it's by showing that the debt is an "undue hardship." There are three basic things that have to be shown in order to use this reasoning:

-- First, you have to show that you can't even have a "minimal" standard of living with your debts, expenses and income level. Essentially, the debt is going to put you into poverty. For example, if you owe $500 per month and you only have a part time job that pays you $200 per week, you may be able to show that you realistically can't pay rent, buy food, keep the heat on or pay for other basic necessities if you must pay the $500.

Financial information needed when filing for Chapter 7

When debt in Georgia is overwhelming, you may want to consider Chapter 7 bankruptcy. This is a type of bankruptcy that liquidates a good portion of your assets -- some things are exempt, though, as the goal of bankruptcy isn't to make you homeless and entirely broke, but to give you a fresh start -- and then eliminates your debt.

As you file the petition, you're going to need to provide the court with detailed financial information. Government officials note that this starts with four main areas, which are as follows:

Chapter 13 bankruptcy takes time

There are many advantages to filing for Chapter 13 bankruptcy, such as the fact that it may do less harm to your credit score and the way you get to keep more of your assets, paying them off over time instead of liquidating them. Chapter 13 gives you a repayment plan that you can use to make your debt affordable again, rather than just eliminating it right away and using your assets to pay down as much as possible.

However, there is one downside that you need to be aware of, and it's that Chapter 13 bankruptcy does take time. You're not going to get a fresh start right away. You have to be dedicated to this process.

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