If you’re behind on your mortgage and other revolving debts, you may be wondering what are the pros and cons of bankruptcy in Georgia? This article lays out all of the pros and cons of bankruptcy when deciding if filing bankruptcy is right for you.
Is Chapter 7 Bankruptcy Right For You?
Before you proceed with filing Chapter 7 in Atlanta Georgia, you’ll want to decide if it makes financial sense. You can determine if Chapter 7 bankruptcy is right for you by asking yourself the following questions:
- Are you judgment proof – that is, are creditors legally barred from taking your property or income even if you don’t file for Chapter 7 bankruptcy? The term judgment proof is commonly used to refer to defendants or potential defendants who are financially insolvent, or whose income and assets cannot be obtained in satisfaction of a judgment. Being “judgment proof” is not a defense to a lawsuit.
- Will Chapter 7 bankruptcy discharge enough of your debt to make it worth your while? The person or business that has filed a bankruptcy case is called the debtor. A creditor is any person or business owed a debt on the date the bankruptcy case was filed. A bankruptcy discharge is a court order that eliminates certain debts. The discharge bans creditors from taking collection action on discharged debts.
- Will you have to give up property you want to keep? Most Chapter 7 bankruptcy filers can keep a home if they’re current on their mortgage payments and they don’t have much equity. However, it’s likely that a debtor will lose the home in a Chapter 7 bankruptcy if there’s significant equity that the trustee can use to pay creditors.
Depending on your answers to these questions, you might find out that Chapter 7 bankruptcy won’t help much or, in the alternative, that it is a good choice for you.
Pros and Cons Of Bankruptcy In Atlanta Georgia
There are pros and cons bankruptcy in Georgia, and knowing how filing bankruptcy Chapter 7 will affect you is key to navigating the bankruptcy waters safely. Check out the infographic below which gives an overview of what the pros and cons are to see if filing Chapter 7 Atlanta Georgia is right for you.
Cons To Filing Chapter 7 In Atlanta Georgia
- Bankruptcy will ruin your credit for some time to come. A Chapter 7 bankruptcy in Georgia can remain on your credit report for up to 10 years, affecting your purchasing powers for that decade, regardless of how much income you have and how affordable the purchase is for you.
- You will lose property that you own that is not exempt from sale by the bankruptcy trustee. You may lose some of your luxury possessions. This could be in the form of jewelry, cars, boats, etc.
- You will lose all your credit cards and the ability to get low interest credit cards, if any, for numerous years. Since you will be more ‘high risk,’ only credit cards with high interest rates to mitigate the risk will allow you to sign up.
- Bankruptcy will make it nearly impossible to get a mortgage, if you don’t already have one. Holding onto your house is very important, if you can afford the payments. Filing for bankruptcy in Georgia will make it very difficult to rent as most landlords see filing bankruptcy as inability to make payments and they want a safe tenant in their properties.
- Declaring bankruptcy now might make it harder to do later if something worse comes along. For instance, if you complete the bankruptcy process under Chapter 7, you cannot file for another Chapter 7 bankruptcy for six years. The six years is counted from the date you last filed for bankruptcy, not when it was resolved. If you are under severe financial stress and there’s no way to get out from under your debts, then filing chapter 7 in Atlanta Georgia is probably your best option at the time.
- Bankruptcy will not relieve you of your obligations to pay alimony and/or child support. Bankruptcy will not get rid of your student loan debt either. These are unforgivable debts. Also remember that not paying child support can land you in jail for a few months to years depending on the severity.
- You may still be obligated to pay some of your debts, such as a mortgage lien, even after bankruptcy proceedings are completed.
- If you file for Chapter 7 relief, but you have a certain amount of disposable income, the bankruptcy court could convert your Chapter 7 case to a Chapter 13, thus changing your plan to be free from most debts within four to six months, to a plan requiring you to repay your debts over the course of three to five years. Chapter 13 bankruptcy is a repayment plan, while filing Chapter 7 will rid you of debts.
Pros To Filing Chapter 7 In Atlanta Georgia
- Although a bankruptcy stays on your record for up to 10 years, the time to complete the bankruptcy Chapter 7 process, from filing to relief from debt, takes only about 3-6 months.
- Most Georgia exemptions allow you enough so that most things you own will be exempt from bankruptcy, sometimes allowing more coverage to keep your property than you need. Additionally, you will get to keep the salary or wages you earn and the property you buy after filing Chapter 7 Atlanta Georgia.
- There are lenders who specialize in lending to “bad risks,” although that is an unfair characterization to make of someone who has taken a major step to solve financial difficulties. Lenders view people who have filed for bankruptcy as bad risk because they were not able to handle their financial situations, even if it was out of their control, such as medical problems, job loss, etc.
- You may also be able to obtain new lines of credit within one to three years of filing bankruptcy, although at a much higher interest rate. This is where the high interest credit cards come into play. They will give you credit cards, just at higher rates to mitigate their risks.
- Although, you can only file under Chapter 7 once every six years, you can always get a Chapter 13 plan if there is another disaster before you are entitled to file for Chapter 7 again. You may file for a Chapter 13 plan repeatedly, although each filing appears on your credit record, and will compound the negative effects on your credit report and purchasing power.
- Bankruptcy will alleviate many of your other financial obligations, but only a family court order can suspend alimony and child support obligations.
- Both judges and trustees have heard far worse stories than yours. So don’t be too embarrassed about your situation. A lot of people face financial hardships, and the people processing your case deal with this on a daily basis. It’s not your fault that life happens sometimes. They are there to help you get through it.
- You can avoid these harsh limitations against filing for bankruptcy by observing all court orders and court rules, and by not asking to have your case dismissed when a creditor asks for relief from the stay. Even if these limitations apply to you, they don’t last forever. You’re only prevented from filing for six months.
- If you don’t owe money on the type of debts that survive bankruptcy (student loans, child support, etc.), the amount and number of debts that a bankruptcy court can relieve you from paying is potentially unlimited.
- Chapter 7 does not require that you have debts of any particular amount in order to file for relief. However, even if your case gets converted to Chapter 13, it can still improve your financial situation by obtaining more favorable terms to pay off your debts. With Chapter 13, you get to keep all of your property as well.
Selling Your House When Filing For Bankruptcy In Atlanta
If you are behind on payments and you know you’re not going to be able to catch back up on them, your best option is to sell your house fast to a company like Breyer Home Buyers.
Keeping your house and going through with a bankruptcy will allow you to either wipe your debts out or restructure the payments of your debts, but you could lose property during the bankruptcy process, you’ll be putting your family through a massive amount of stress, and your credit will be ruined for up to 10 years. That’s 10 years of only getting approved for high interest credit cards, auto loans, and home loans (if you can even get any). If you lose your home, you may not be able to rent as most landlords view bankruptcy and bad credit scores as a reflection of whether or not they will get paid.
Selling your house through a Georgia Realtor, you’ll have to make repairs and upgrades, manage contractors and pay them, show your house to potentially hundreds of people, keep your house clean for showings, let your house sit on the market for several months, and pay Realtor fees and commissions.
If you’re behind on payments, and you need to get out of the property quickly, selling your house fast with an agent is not an option. There’s too much money and time involved when you’re selling with a real estate agent.
At Breyer Home Buyers, you don’t have to make repairs, you close on the date of your choice, and you can be confident that we can close.
We buy houses in Atlanta, Georgia as-is (you make zero repairs and leave your junk), we pay closing costs, you don’t pay us fees or commissions (we are not Realtors, we are cash buyers), and we can close in as little as 14 days.