Living with debt can turn daily life into a constant struggle. When managing one’s debts is simply no longer possible, it may be time to consider bankruptcy. Consumers generally have two options for bankruptcy — Chapter 7 and Chapter 13. While both offer relief from debt, there are limits as to who can file for Chapter 7.
To file for Chapter 7 bankruptcy, one has to first pass the means test, meaning that his or her income has to be lower than the median income in Georgia. This is generally a good option for those who do not earn much, need quick relief and whose debts are mostly dischargeable. Common examples of dischargeable debt includes:
- Credit cards
- Medical bills
- Personal loans
Chapter 13 is usually for those who earn more than Georgia’s median income and can reasonably afford a repayment plan. Repayment plans last anywhere from three to five years, and upon completion remaining qualifying debt is usually discharged. Nondischargeable debts — like most student loans, alimony and child support payments — will still need to be paid back. Chapter 13 is also a good option for those who have extra vehicles and properties that they wish to keep during the bankruptcy process.
Deciding whether to pursue Chapter 7 or Chapter 13 bankruptcy is just the first step. Navigating the process on one’s own can be quite a challenge, especially for those who are unsure of which form of bankruptcy to pursue. For these individuals, it may be helpful to speak with an attorney who is experienced with these matters.
