Chapter 7 Bankruptcy
Learn about Chapter 7 bankruptcy, the most common form of bankruptcy. A Chapter 7 wipes out most debts and protects personal property.
What is Chapter 7 Bankruptcy?
Chapter 7 is available to individuals, couples and businesses. The process is often referred to as "liquidation". In theory, you are surrendering your assets to the court in exchange for a discharge (elimination) of all of your debts. However, individuals and couples are allowed to keep certain "exempt" property that varies by category and value.
Who typically files Chapter 7?
Debtors with primarily consumer debt, who earn less than the "median income" in Georgia will qualify for Chapter 7. Debtors with an income in excess of the median income must pass the new “means test” to file for Chapter 7 protection. Our office can assist you to determine whether you qualify. Debtors filing Chapter 7 in the State of Georgia tend to have little to no equity in their homes, normal household goods, cars with minimal equity and primarily unsecured debts such as credit card and medical bills. Often, debtors are able to keep their homes and cars, eliminate the majority of their debt and obtain a fresh start.
Is credit counseling required?
Individual debtors with primarily consumer debts are now required to complete credit counseling before they are eligible to file under the Bankruptcy Code. Not all counseling services qualify. Our office can assist you with making the appropriate arrangements.
What about Chapter 7 for a business?
Businesses can file Chapter 7, but are not entitled to protect any property. Chapter 7 works well for those businesses that need to be closed down and where there are minimal personal guarantees on the business debt.
What property is protected under Chapter 7 ? (per individual debtor)
- $21,500 of equity in your home
- $ 5,000 of equity in your car
- $ 5,000 of household goods and clothing
- $ 1,200 plus any unused amount of the household exemption (up to $10,000) to protect any other property
- Any amount of funds in a 401k, IRA or other ERISA qualified retirement plans up to $1,000,000
What if I have more property than can be protected?
Chapter 7 may not be right for you. However, other bankruptcy chapters may solve your problems.
How often can I file a Chapter 7 case?
Once every eight years. However, if your prior case was filed under Chapter 13, you may be eligible much sooner.
For an analysis of whether Chapter 7 is right for you or your business, please contact our office for an appointment.
Want more information? Call 770-426-9359
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