Filing for bankruptcy is not a sign of failure, but rather a legal tool that can help individuals start over financially. In Georgia, Chapter 7 Bankruptcy allows individuals to eliminate various types of unsecured debts, such as credit card debt, medical bills, and personal loans.
However, not everyone is eligible for this type of relief. Income and assets play a significant role in determining eligibility. At Duncan Bankruptcy Law, our team can help you navigate this process and make sure you understand your options. We will guide you through the necessary steps and help you achieve financial freedom and independence.
The Chapter 7 Means Test: How Income Determines Eligibility
The first major hurdle in qualifying for Chapter 7 Bankruptcy is passing the means test, a federal requirement established under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This test compares your household income with the median income of families in Georgia with a similar size to yours.
If your average monthly income over the past six months is below the Georgia median, you are automatically eligible for Chapter 7 Bankruptcy. However, if your income is above the median, you will need to complete the Means Test, which subtracts allowable expenses such as housing, transportation, and childcare to determine if you have sufficient discretionary income to repay some of your debts. If your discretionary income is too high, you may need to file under Chapter 13 Bankruptcy instead.
What Counts as “Income”?
For the Means Test, income includes wages, bonuses, self-employment earnings, rental income and even unemployment benefits, but not social security benefits, which are excluded under 11 USC § 101 (10A).
Importantly, income earned after filing for Chapter 7 is not part of the bankruptcy estate and cannot be used to pay creditors, meaning your future wages are protected, a key benefit of chapter 7 bankruptcy.
How Assets Impact Your Chapter 7 Case
Even if you pass the means test, your assets still matter. In Chapter 7 Bankruptcy, a trustee may sell non-exempt property in order to repay creditors. However, Georgia law offers generous exemptions that allow most individuals to keep essential belongings, such as household items, clothing and tools.
Under Georgia Code § 44-13-100, you may protect the following:
- Up to $21,500 in home equity (or $43,000 for married couples filing jointly).
- Up to $5,000 in motor vehicle equity.
- Household goods, clothing, and tools of the trade.
- Retirement accounts (including 401(k)s and IRAs).
- A “wildcard” exemption of up to $600 (plus up to $5,000 of unused homestead exemption).
At Duncan Bankruptcy Law, we carefully analyze your assets to help you maximize your exemptions and protect what matters most – your home, car, and financial stability.
Common Misconceptions About Chapter 7
Many people believe that bankruptcy means losing everything or that only those who are completely destitute qualify. However, this is not true. In fact, most people who file for Chapter 7 Bankruptcy in Augusta retain all their property as it falls within the exemption limits set by Georgia. While bankruptcy can affect your credit score, it often provides a quick path to financial recovery, especially if you are drowning in unmanageable debt.
Why Legal Guidance Is Essential
Bankruptcy law is a complex area of U.S. law that can be difficult to navigate. Making mistakes in reporting income, calculating the means test incorrectly, or claiming exemptions improperly can lead to the dismissal of your case or the loss of assets. That’s why it’s crucial to work with an experienced Chapter 7 Bankruptcy attorney in Augusta, GA who can help you navigate this complex process.
At Duncan Bankruptcy Law, we have helped thousands of people like you to recover after job loss, illness, divorce or overwhelming debt. Our focus on bankruptcy and student loan cases means that you can benefit from our deep expertise and compassionate support.
Take the First Step Toward Financial Freedom
If you are considering bankruptcy, it is important not to wait until your financial situation becomes worse. When you file for bankruptcy, an automatic stay will go into effect, stopping wage garnishment, foreclosure, and other forms of creditor harassment.
Contact Duncan Bankruptcy Law today for a free consultation to discuss whether Chapter 7 Bankruptcy is right for you. We can help you protect your assets and guide you towards a debt-free future. Remember, bankruptcy is not who you are, but what you do. With the right legal team by your side, it can be the start of your financial rebirth.
