New Chapter 7 Bankruptcy Rules

In Georgia, more than 99 percent of bankruptcies filed are either Chapter 7 or Chapter 13 bill consolidation bankruptcies. Recently, a man with a failing business filed for Chapter 7 bankruptcy, which is a full liquidation bankruptcy. Most small business owners end up filing a Chapter 7 bankruptcy because their business is not receiving any revenue and they themselves don’t have the funds to pay off creditors. Thus, they end up taking on most of the debt obligations as a personal debt and therefore can use Chapter 7 to rid themselves of the debts and liquidate the business. The owner’s life can start over and the business permanently shuts down.

Nevertheless, since the Chapter 7 bankruptcy rules have changed, it is much harder than before to qualify for a Chapter 7 bankruptcy. In order to find out if you qualify for a Chapter 7 bankruptcy, contact a Georgia Chapter 7 bankruptcy attorney today.

New Chapter 7 bankruptcy counseling requirements

Since the laws have changed, there are new Chapter 7 bankruptcy counseling requirements. These Chapter 7 bankruptcy counseling requirements require an individual filing Chapter 7 bankruptcy to have counseling before a bankruptcy is filed and before a bankruptcy is actually completed. The purpose of the bankruptcy counseling requirement is to make sure that an individual actually needs to file bankruptcy before they do so. Then, after the bankruptcy is filed, a two-hour course is needed to make sure that the individual knows how to handle their future debts in order to avoid future bankruptcy filings.

New bankruptcy median income test standards

The new bankruptcy income standards measure whether a filer is below or above the median income of others in the state of Georgia. A six-month average of continuous income is measured and those who had a very high paying job will find themselves in the high-median range in the first six months after termination. If an individual is above the median income, they will not be able to file for a Chapter 7 bankruptcy and may be forced to file a Chapter 13 bankruptcy and repay some of the debt. However, gifts and anything that comes from the Social Security office does not count as income so only other continuous income should be counted. A Georgia Chapter 7 bankruptcy attorney can help determine whether you are able to file for a Chapter 7 bankruptcy based on the median income test.

Student loans

Under the new bankruptcy law, student loans cannot be discharged. Before, there was a waiting period before the loans became due and the filing of a bankruptcy to determine whether they could be discharged. Today, student loans mostly cannot be discharged at all in a bankruptcy filing.