What is Chapter 7?

A chapter 7 is also known as the “fresh start” provision of the bankruptcy code. It allows you to wipe out all of your debt and get a fresh start. In a chapter 7 we show the Court that you are unable, based upon your budget, to pay the debt that currently hangs over you. Approximately 90 days after we file your chapter 7, you are granted a discharge and you no longer owe the debt.

How much does it cost?

I charge $1,250 for filing Chapter 7   This cost includes your filing fee, attorney fee, and both classes that are required by the Code.

Now, while a chapter 7 is as simple in theory as described above there are a number of factors to consider. For example, not every kind of debt can be discharged in a 7. Debts arising from drunk driving or intentional acts are not dischargeable.   Also, most student loans, child support and tax debts less than 3 years old cannot be discharged.

Also, if you have secured debt (debt tied to collateral like a car note or a mortgage) you have to decide if you wish to keep the property. If so, you must reaffirm the debt which means you must continue to pay the debt if you want to keep the collateral.

What is a reaffirmation agreement?

A reaffirmation agreement is basically a contract between you and your creditor where you agree to give up your Chapter 7 rights to wipe out the debt and legally treat the debt as if you have never filed Bankruptcy.  After a reaffirmation agreement is filed, the creditor that you reaffirmed is now in a better position than they were before you filed because you can’t file chapter 7 against them for 8 years. 

Does the creditor have to let me reaffirm?

No.  They are not required to let you reaffirm but always do when you are current because you are putting in a great position after you reaffirm.  After filing Chapter 7, the only debt you owe are the debts you reaffirm and you can’t file Chapter 7 again for 8 years.

Will the Chapter 7 trustee come to my house?

No.  I have been practicing since 1998, and I have never heard of a case in Georgia where the Trustee actually went to a person’s house.   

When is it better to file Chapter 13?

When you have a car that you have owned for more than 2.5 years and you owe more on the car than its worth, you should take a look at how much your Chapter 13 payment would cost.  In a Chapter 13, if you have owned the car for more than 2.5 years, you can cram down the debt.  This means that you pay back only the value of the car and not the total amount owed.  Also, the interest rate on paying a car back in a Chapter 13 ranges from 6 to 9 percent on average. 

If you are behind on house payments, Chapter 13 allows you to take the arrears on your house and spread out the debt over a longer period (60 months is the limit for a chapter 13 plan). 

What is the means test?

Basically, if you have made more money in the past six months than an average family of your size, you might be barred from filing chapter 7.   Chapter 13 might be your only option under the Code.  To give you an answer about your particular situation, I need to review your last six months pay stubs.   Call me today at 706-295-0030. 

These are complex questions and you should discuss them with me. It does not cost you to come into my office and let me examine your situation. I hope you will call today.

We have office locations in Dallas, Cartersville, Rome and Dalton.

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DISCLAIMER
The information contained on this page is for information only. It is not intended to be legal advice, nor should you make legal decisions based on this information. Please consult with me to see how the law applies to your particular situation.