Kennesaw, GA Bankruptcy Law Firms & Lawyers

   Chapter 7 is normally used to discharge unsecured debts like credit cards and medical bills.  Debts that have collateral, such as a home mortgage or a car loan, are treated differently in Chapter 7.  In most cases, you must either reaffirm the debt or surrender the collateral.  A reaffirmation agreement is a document that is signed by both the debtor and the creditor and filed with the Court.  It specifies that the debt will not be discharged, and that you will continue to be legally obligated to pay.  If you are current on the payments, and if you are confident that you can make all future installments, then reaffirmation may be a good option. However, in Chapter 7, you are only entitled to keep a certain amount of property (called exempt property).  The maximum exemption in your residence in Georgia is $21,500 for a single individual or $43,000 for a married couple.  If the equity in your home exceeds the allowed exemption by a significant amount, the Court's trustee could sell the property.  For example, assume you have a house worth $200,000 with an outstanding mortgage of $100,000.  There is $100,000 of equity in the property.  A single individual could only exempt $21,500 of the equity.  The Trustee would likely try to sell the home.  You would receive your exemption amount from the sale proceeds, and the balance would be used to pay your creditors.  So, if you want to go with Chapter 7 and keep your home, you want to be sure the equity in the property is not significantly more than your allowed exemption amount.  You also want to be sure that the payments are current.  Otherwise, the lender may not agree to a reaffirmation of the debt. If you are behind on the mortgage payments, or if there is too much equity in the property to keep it in a Chapter 7 case, you may have to consider Chapter 13.  Chapter 13 allows an individual or couple with regular income to deal with their debts by making regular payments to a Chapter 13 Trustee over a period of 3 to 5 years.  The plan can cure an arrearage on a home mortgage over a 60 month term, and deal with other short-term debts such as credit cards, car loans, and medical bills.  This can free up funds so that future mortgage payments can be made in a timely manner. Deciding whether to file a bankruptcy case, and if so what chapter to use, can be complicated.  It is critical to get good advice from a qualified and experienced bankruptcy attorney before making your decision. Morgan & Morgan of Athens, Georgia has more than 30 years experience helping homeowners save their homes through Chapter 13.  We offer a free initial consultation with an experienced attorney, NOT a paralegal or assistant, to fully evaluate our client’s options.  Chapter 13 plans can be started with as little as $75 up front.  If you are facing foreclosure, call (706)548-7070 today for an appointment.   

If you don't pass the means test for chapter 7 you can file chapter 13. If circumstances change, such as loss of income after the case is filed, you can convert the case to chapter 7.