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Frequently asked questions about bankruptcy 

General Bankruptcy FAQs
What is bankruptcy?

Bankruptcy is a federal legal process that allows individuals and businesses to address debt they cannot repay. Depending on the type of bankruptcy filed, debts can be eliminated entirely, restructured into a manageable payment plan, or discharged after a period of repayment. Bankruptcy is governed by federal law and handled in federal courts.

No. Georgia law provides bankruptcy exemptions that protect significant assets including your home equity, vehicle, household goods, retirement accounts, and more. The vast majority of Chapter 7 cases in Georgia are no-asset cases, meaning filers keep everything they own.

Bankruptcy does lower your credit score in the short term. Chapter 7 stays on your credit report for 10 years and Chapter 13 for 7 years. However, many people begin rebuilding credit within 12 to 18 months of filing. Eliminating debt improves your debt-to-income ratio, and secured credit cards and credit-builder loans can help restore your score faster than most people expect.

Yes, but there are waiting periods between filings. You must wait 8 years between Chapter 7 filings, 4 years between a Chapter 7 and a Chapter 13, and 2 years between Chapter 13 filings.

Bankruptcy is a public record, but in practice most employers never find out unless they specifically search court records. Your employer cannot legally fire you or discriminate against you solely because you filed bankruptcy. Government employers are expressly prohibited from doing so under federal law.

Yes. The automatic stay that goes into effect the moment you file bankruptcy requires all creditors — including employers carrying out garnishment orders — to immediately stop. Your employer is typically notified within 1 to 2 business days.

The automatic stay is a federal court order that takes effect the instant you file for bankruptcy. It immediately stops all collection activity — phone calls, letters, lawsuits, wage garnishments, bank levies, repossessions, and foreclosures. It applies to virtually all creditors simultaneously.

No. One spouse can file individually. However, if most of the debt is joint, filing together (a joint petition) is often more efficient and cost-effective. An attorney can help you evaluate whether filing jointly or individually makes more sense for your situation.

Certain debts survive bankruptcy regardless of the chapter filed, including student loans (except in rare hardship cases), child support and alimony, recent income tax debts, debts from fraud or intentional misconduct, criminal fines and restitution, and DUI-related injury judgments.

What is Chapter 7 bankruptcy?

Chapter 7 is liquidation bankruptcy — the most common type filed in Georgia. It eliminates most unsecured debts like credit cards, medical bills, and personal loans. A court-appointed trustee reviews your assets, and any non-exempt property may be sold to pay creditors. Most Georgia Chapter 7 cases are no-asset cases, meaning nothing is sold. The entire process typically takes 3 to 6 months.

To qualify for Chapter 7, you must pass the Georgia means test, which compares your income to the Georgia median household income. If your income is below the median, you qualify automatically. If it is above, you may still qualify after deducting allowable expenses. You also cannot have received a Chapter 7 discharge within the past 8 years.

The means test is a calculation required by federal bankruptcy law that determines whether your income is low enough to qualify for Chapter 7. It compares your average monthly income over the past 6 months to the median income for a household of your size in Georgia. If you are below the median, you pass automatically. If above, additional calculations determine whether you have enough disposable income to fund a Chapter 13 plan.

Chapter 7 eliminates most unsecured debts including credit card debt, medical bills, personal loans, utility bills, collection accounts, certain lawsuit judgments, and lease obligations for contracts you reject. It does not eliminate student loans, child support, alimony, most tax debts, or debts from fraud.

Most Chapter 7 cases in Georgia are completed in 3 to 6 months from the filing date to discharge.

Not if your home equity is within Georgia’s homestead exemption — up to $21,500 for individuals and $43,000 for married couples filing jointly. If you are current on your mortgage and your equity is protected, you can keep your home. If you are behind on mortgage payments, Chapter 7 does not provide a mechanism to catch up — Chapter 13 is better suited for that.

Georgia’s vehicle exemption protects up to $5,000 in equity in one motor vehicle. If your equity is within that limit and you stay current on payments, you can keep your car. If you owe more than the car is worth (which is common), you can reaffirm the loan and continue making payments.

The court filing fee is $338. Attorney fees vary based on case complexity. Many bankruptcy attorneys offer payment plans for their fees.

What is Chapter 13 bankruptcy?

Chapter 13 is reorganization bankruptcy. Instead of eliminating debt immediately, you propose a 3 to 5 year repayment plan to catch up on certain debts — like mortgage arrears or car loans — while paying back a portion of unsecured debt bas

Chapter 13 is generally better if you want to save your home from foreclosure, catch up on missed car payments, have non-exempt assets you want to keep, earn too much to qualify for Chapter 7, or have debts that can only be addressed through a repayment plan such as certain tax debts or non-dischargeable obligations.

Chapter 13 requires a 3-year repayment plan if your income is below Georgia’s median, or a 5-year plan if it is above. After completing the plan, remaining eligible debts are discharged.

Yes. Filing Chapter 13 triggers the automatic stay, which immediately stops a foreclosure sale — even if it is scheduled for the same day. Chapter 13 then allows you to cure your mortgage arrears over the life of the plan while continuing to make regular mortgage payments going forward.

A Chapter 13 repayment plan is a court-approved monthly payment that you make to a bankruptcy trustee for 3 to 5 years. The trustee distributes the funds to your creditors according to the plan. Priority debts like mortgage arrears and certain taxes are paid first; unsecured creditors receive what is left based on your disposable income.

The court filing fee is $313. Attorney fees for Chapter 13 are higher than Chapter 7 due to the complexity of the case and the ongoing nature of the plan. Fees are typically paid in part upfront and in part through the repayment plan.

If your financial circumstances change, you may be able to modify your plan, convert to Chapter 7, or in limited circumstances receive a hardship discharge. If you simply stop making payments without any of these alternatives, your case may be dismissed — which ends the automatic stay and leaves you without bankruptcy protection.

What is Chapter 11 bankruptcy?

Chapter 11 is reorganization bankruptcy primarily used by businesses, though individuals with very high debt levels can also file. It allows the debtor to propose a reorganization plan to creditors while continuing to operate. Chapter 11 is more complex and expensive than Chapter 7 or 13 and is typically used when the debt load is too high for Chapter 13 but the business or individual wants to restructure rather than liquidate.

Subchapter V is a streamlined version of Chapter 11 designed for small businesses with less than approximately $3 million in total debt. It is faster, less expensive, and less procedurally complex than standard Chapter 11. For most small Georgia businesses that need to reorganize, Subchapter V is the preferred option.

Yes. Individuals who have too much debt to qualify for Chapter 13 (which has debt limits) but want to reorganize rather than liquidate can file Chapter 11. This is relatively uncommon for individuals but does occur in cases involving significant business debt or real estate holdings.

Standard Chapter 11 cases can take 1 to 2 years or more. Subchapter V cases are designed to move faster, often completing in under a year.

The court filing fee for Chapter 11 is $1,738. Attorney fees are substantially higher than other chapters due to the complexity of the process. Subchapter V cases are significantly less expensive than standard Chapter 11.

What are bankruptcy exemptions?

Bankruptcy exemptions are protections provided by state or federal law that allow you to keep certain property when you file bankruptcy. In Georgia, exemptions are governed by O.C.G.A. § 44-13-100. Georgia requires you to use state exemptions rather than the federal exemption system.

Georgia’s homestead exemption protects up to $21,500 in equity in your primary residence. Married couples filing jointly can protect up to $43,000. This exemption only applies to your primary residence — not investment properties or vacation homes.

Georgia law protects up to $5,000 in equity in one motor vehicle. If your vehicle is worth less than $5,000 or you owe more than it is worth, it is fully protected.

Yes. 401(k) plans, IRAs, pensions, and most other qualified retirement accounts are fully protected in Georgia bankruptcy under both state and federal law. You do not need to use your retirement savings to pay creditors.

Georgia’s wildcard exemption allows you to protect up to $1,200 in any property, plus up to $10,000 of any unused homestead exemption. This provides significant flexibility to protect property that does not fit neatly into other exemption categories.

Yes. Georgia exempts up to $5,000 in household goods, furnishings, appliances, books, and clothing, with no single item exceeding $300 in value.

What do I need to file bankruptcy in Georgia?

You will need to provide your attorney with two years of tax returns, recent pay stubs (last 6 months), a list of all debts and creditors, a list of all assets and property, recent bank statements, and documentation of any recent property transfers or large payments. Your attorney will prepare the official bankruptcy petition and schedules from this information.

Yes. Federal law requires you to complete a credit counseling course from an approved agency within 180 days before filing bankruptcy. The course typically takes about an hour and can be completed online. You must also complete a debtor education course after filing but before your discharge.

Georgia has three federal bankruptcy districts. The Northern District covers Atlanta, Gainesville, Newnan, and Rome. The Middle District covers Macon, Columbus, Athens, and Valdosta. The Southern District covers Savannah, Augusta, Brunswick, Dublin, Statesboro, and Waycross. You file in the district where you live.

The 341 Meeting is a short, required hearing — typically 5 to 10 minutes — where the bankruptcy trustee asks you basic questions about your petition under oath. It is not a courtroom proceeding. Your attorney will be present with you. Creditors rarely appear. Most people find it much less intimidating than they expected.

In Chapter 7, the discharge is typically granted 60 to 90 days after your 341 Meeting of Creditors. In Chapter 13, the discharge is granted after you successfully complete your 3 to 5 year repayment plan.

How long does bankruptcy stay on my credit report?

Chapter 7 bankruptcy stays on your credit report for 10 years from the filing date. Chapter 13 stays for 7 years. Individual accounts discharged in bankruptcy may also show as discharged, which remains for 7 years.

Yes. Secured credit cards — where you deposit money as collateral — are available to most people shortly after bankruptcy and are one of the most effective ways to rebuild credit. Many people qualify for unsecured credit cards within 1 to 2 years after discharge.

Yes, though there are waiting periods. For FHA loans, the waiting period is 2 years after a Chapter 7 discharge and 1 year into a Chapter 13 plan with court approval. For conventional loans, the waiting period is 4 years after Chapter 7 and 2 years after Chapter 13 discharge.

Yes. Many lenders offer auto loans to recent bankruptcy filers, though interest rates will be higher initially. Making consistent on-time payments on a post-bankruptcy auto loan is one of the fastest ways to rebuild credit.

Yes — and often faster than people expect. Bankruptcy eliminates the debt that was dragging you down, improves your debt-to-income ratio, and gives you a clean foundation to rebuild from. Many people see meaningful credit score improvement within 12 to 18 months. The financial reset bankruptcy provides is often the turning point people needed.

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