Chapter 7 Bankruptcy

Chapter 7 vs Chapter 13

Filing for Chapter 7 Bankruptcy in Augusta GA is a decision that you shouldn’t make lightly. When you ask the court to help, it can have a devastating effect on your credit. A bankruptcy will stay on your credit report for up to 10 years, which can affect your ability to buy a home or a vehicle. Still, when you are drowning in debt, you need to call the Chapter 7 bankruptcy attorneys at Claeys, McElroy-Magruder & Kitchens to help. With years of experience, we’ve been able to help our clients through the turmoil of bankruptcy so they can get on with their lives.

We deal with people from all walks of life. While most have a general understanding of how filing for relief from the court works, most folks have many questions. You have two options for bankruptcy: a Chapter 7 or a Chapter 13.

Chapter 13 is a petition that is filed when a person has assets or disposable income. It’s a reorganization plan that allows you to pay back a portion of your debts. A repayment plan is drafted by a Chapter 13 bankruptcy firm, which must be approved by the court. It allows you to repay your creditors in small payments over the next 3-5 years. Chapter 7, on the other hand, is a complete liquidation.

Qualifying for a Chapter 7 Bankruptcy

After reviewing the Means Test, your friendly Chapter 7 bankruptcy firm in Augusta GA can determine which chapter is best for you. The Means Test considers all your incoming and outgoing finances, and it will help the courts to determine if you have disposable income. These tests are very generous and allow for expenses like church tithes and clothing.

Understanding the Automatic Stay

Once it has been determined that you cannot repay even a portion of your debts, which is the case in many situations, then a voluntary petition is filed for Chapter 7. From the minute we file the paperwork, you enter a period known as the Automatic Stay. All collection activity against you must stop. The stay lasts the length of the bankruptcy and it gives you a reprieve from collection efforts.

If your home is in foreclosure or your vehicle is about to be repossessed, you can avoid the collection activity while in an active bankruptcy. During that time, your creditor can file a motion to remove the stay so that they can resume collection activities. For example, this is seen when you are several months behind in the payments on a vehicle, and the creditor wants to sell the asset. Your Chapter 7 bankruptcy firm can handle this motion by countering asking for more time as you may wish to reaffirm the vehicle, though you will need to catch up on the arrearages.

The 341 Meeting of Creditors

The 341 Meeting of Creditors is a mandatory session that you must attend. It is conducted by a Trustee from the court who will oversee your case. This meeting is held with several other people in the Augusta area who are also filing for relief from the courts. You will gather in an informal conference-style room where you will take your turn in a question and answer session.

The trustee will ask you several questions regarding your financial situation. They want to know if you have any debts or assets that have been omitted from the petition either on purpose or by accident. One of our Chapter 7 Bankruptcy attorneys will be by your side during this meeting and help you get through it.

Your creditors can appear in this session, or they can file an Objection motion to keep the debt from being discharged. They can ask the court to make you pay the debt and not be covered under bankruptcy. There are only a few situations where the court would grant such a request; they include the following:

  • The debt was created less than 90 days before the filing of the petition
  • The debt was obtained by fraudulent means
  • The debt is not dischargeable according to bankruptcy laws

What Cannot Be Discharged Under a Chapter 7 Bankruptcy?

While Chapter 7 bankruptcy is considered a complete liquidation, there are some debts that the court will not discharge. These debts are anything fraudulent in nature. Meaning, you obtained a debt by methods of fraud, like getting a credit card by falsifying information.

Things like student loans, taxes owed to the IRS or state entities, and fines and court costs, cannot be discharged. Thankfully, your Chapter 7 bankruptcy firm in Augusta GA knows how to deal with creditors. Many don’t bother showing. If there are any large purchases made on a credit card that can be used to repay the debt, they can ask the court to grant them that purchase. For instance, you bought an expensive tractor on a home improvement store credit card, and now you want to write the debt off.

If the tractor has value, then they can petition the court for the equipment. However, we can handle the situation and often settle the debt for the item’s fair market value. Therefore, you need a knowledgeable bankruptcy attorney working for you.

Reaffirmation Agreements and Keeping Assets

One of the first questions that many people ask when considering a Chapter 7 Bankruptcy in Augusta GA is if they will lose their assets. The court allows you to keep a specific dollar amount of exemptions. If you have a spouse, when you file for protection, your asset amount is different than that of a single person.

The exemptions are confusing, and each case is different. It’s possible to keep your car and home if you have the money to continue the payments. The catch is that you must be current on the loan. If you are past due by any amount, then you must work with the creditor to pay those funds. Sometimes, the creditor will modify the loan and put the past due amount on the end of the term.

If you would like to keep a debt, particularly a secured one, you can ask your attorney to reaffirm the debt. A reaffirmation simply means that you want to keep your asset and continue payments. It’s not always possible to keep property and cars, especially if you are past due and cannot bring the account current.

The lender usually works with people as it’s in their best interest to avoid repossession and short sales. However, you should know that if you reaffirm a debt and later default on it, you will no longer have the court’s protection. The creditor can and will attach your wages and pursue whatever other collection activity is necessary.

The Discharge

Typically, most people receive a discharge from their debts about 90 days from the 341 Meeting of Creditors. The courts must allow ample time for the creditors to file any objections to the discharge. If a creditor should file something in court, then it will extend the time it takes to discharge your case.

Keep in mind that you cannot apply for credit and other loans during the bankruptcy process. Once you are discharged, It is imperative to make wise credit decisions from this point forward, or you will be right back in the same mess.

When the bankruptcy laws changed in 2005, things became more stringent to keep people from filing too often. You can only file a Chapter 7 every eight years, but you can file a Chapter 13 if you need immediate help again before that time frame is up.

Navigating the Court System

some people try to file for bankruptcy without the help of an attorney. While the court allows Pro Se filers, it’s not recommended. Filing a petition and all the schedules that go along with it is a long process. If you mess up the paperwork or forget to submit something essential to the court, it can cause your case to be thrown out.

Contact Claeys, McElroy-Magruder & Kitchens Chapter 7 bankruptcy firm in Augusta GA to ensure that your case is done correctly, and you get in and out of the courts in a timely manner. Bankruptcy is a good way to erase your debts and start fresh.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.