The Chapter 7 Bankruptcy: Rome GA Attorney Advises
A Chapter 7 bankruptcy Rome GA is the most common form of financial relief for debtors. A Chapter 7 bankruptcy discharges all debt owed by the debtor, save for certain debts which are non-dischargeable. The Chapter 7 process is usually no longer than three to four months and debtors can normally keep their personal assets.
Filing for Chapter 7 is a big commitment, but it is definitely not a decision you should make prior to consulting a qualified bankruptcy attorney in Rome GA.
Why Does a Person End Up Filing Bankruptcy?
There are many reasons why a person would file Chapter 7 bankruptcy. Sometimes the only way to settle your debt issues is to file bankruptcy. One of the bigger reasons to file Chapter 7 is loss of income. Whether due to being let go by your employer or just a reduction in salary, the slightest change in income can destroy your finances if you are unable to maintain your debt as a result.
Another reason a person may file Chapter 7 bankruptcy is a divorce. Divorce automatically reduces income for the two people involved and it can be back-breaking to both sides.
Medical issues can also result in having to file a Chapter 7. A debtor who has medical problems might miss work and have a pile of medical bills to pay long after they recover from their sickness. If a debtor finds themselves in one of these situations, Chapter 7 will probably be the best option for them to take.
Requirements to Qualify for a Chapter 7
In order to qualify for Chapter 7 relief, you must pass one requirement: your gross household income must be at or below the median income for that household size in your state. If not, you must pass The Means Test. The Means Test takes some of your monthly expenses into account, such as mortgage or rent, car payment, health insurance, utilities and income tax, etc. These expenses are weighed against your gross monthly income for the previous six months.
If your disposable income average is in the negative, you will qualify for Chapter 7. If it is not, then you will not qualify and will have to find other relief, such as a Chapter 13. The Means Test can be complicated and a bankruptcy attorney will come in useful if you have to take it. There are some exceptions to the income requirement, but the vast majority of debtors will have to pass this requirement to file a Chapter 7.
Outside of the income issue, a debtor should be able to get their debts discharged in a Chapter 7 without any trouble. However, every debtor should make sure they understand their asset situation before filing a Chapter 7. Assets can range from jewelry to bank accounts, as well as numerous other personal items or accounts of value.
The assets most commonly seized by the trustee for the bankruptcy estate are vehicles. While most people owe money on their vehicles and don’t have too much equity in them, there are some people who own their cars outright. Depending on what state they live in, the exemptions provided by the court to protect their assets (most states have a vehicle exemption that ranges from $1,000 to $10,000) might not be enough to fully exempt the vehicle. In that situation, the debtor will have to make a decision on whether they can afford to make payments to the court or in the alternative, surrender their vehicle.
Real property is also commonly seized by the court. As with cars, states have exemptions that usually protect homes for the most part. However, the safest route for a debtor to take would be to consult with an attorney prior to filing so they ensure that their assets are protected.
Can Chapter 7 Help With Foreclosure?
Some debtors file Chapter 7 due to a current foreclosure. These debtors file knowing that the bankruptcy will automatically freeze the current foreclosure case and buy them some time to either vacate the property or work out a solution with the mortgage company.
While Chapter 13 is the safer route for debtors who want to save their home, sometimes Chapter 7 is the better option for the debtor. Some debtors cannot afford Chapter 13 payments while other debtors are just trying to buy some time before they leave the home. It is important that debtors in this position have a plan when they are filing Chapter 7 bankruptcy for the purposes of halting a foreclosure, as the timeline is not finite and creditors can maneuver quicker in a Chapter 7 than in a Chapter 13.
Chapter 7 Bankruptcy can be a complicated process. Any debtor who intends to file should consult an attorney to ensure they are making the right decision, qualify for the relief requested and understand what they can and can’t protect as it relates to their assets.
If the debtor is properly prepared, the Chapter 7 bankruptcy process can be a great solution and provide genuine relief for the debtor. Without that knowledge, they could end up in navigating a minefield that results in them being transferred to a Chapter 13 or losing property they did not intend to surrender. Make sure you are properly prepared and informed so that you can have a smooth bankruptcy and receive that fresh start that is the goal of every debtor who files Chapter 7 bankruptcy.