Considering Bankruptcy – Don’t Listen To Your Friends
If you are considering bankruptcy in Georgia, don’t listen to the legal advice of your friends. I recently met with a Calhoun GA bankruptcy client who had all kinds of misinformation about bankruptcy because they listened to their friends.
The most common example of bad advice from friends that I hear from people who are considering bankruptcy is, “My friend who told me to sign my house over to my son before I file bankruptcy.” This is terrible legal advice for many reasons. First, having a house in your name is not a problem for most people who file bankruptcy in Georgia. Georgia allows you to exempt $10,000.00 worth of equity in your house if you are a single person and $20,000.00 if you are married. In this current awful real estate market, almost no one has real equity in their house. Second, if you transfer an asset to a relative to try to keep creditors from getting it, you are in violation of the Georgia Fraudulent Transfer Act. Third, when you file for bankruptcy, you must list every transfer of any property you have made within the last two years. Fourth, once the trustee finds out about the transfer, they can undo it.
Another common whopper I hear from people who are considering bankruptcy is, “My friend told me that he got to keep his house for free after he filed for bankruptcy in Georgia.” The truth is that you have to make all of your future mortgage payments in Chapter 13 and Chapter 7 unless you are giving the house back to the mortgage company. As I explained to my Calhoun GA bankruptcy client, there is no such thing as getting your house for free just because you filed bankruptcy.
I third common misunderstanding I hear from people who are considering bankruptcy is, “My friend’s bankruptcy attorney got his payment down to $200 per month so I expect you to do the same for me.” This truth is that your payment in a Chapter 13 case is based on the facts of your case and not your friend’s case. If you owe a more secured debt than your friend, your Chapter 13 payment has to be higher if you want to keep the collateral.
In conclusion, people considering bankruptcy should rely on their bankruptcy attorney for legal advice and not friends. It will save you a lot of frustration.