WHEN IS THE RIGHT TIME
TO FILE FOR BANKRUPTCY?
July 26, 2021
Filing for bankruptcy can help individuals and families going through financial distress achieve the financial relief they need so that they can start fresh with a clean financial slate. However, choosing bankruptcy as a debt relief option may impact various aspects of your life, including your assets, finances, credit report, and future interest rates. That’s why it is so important that you sit down with an experienced Georgia bankruptcy attorney to discuss your situation carefully so that together, you can determine if now is the right time to file for bankruptcy.
At Pytte Law, I am dedicated to providing comprehensive and knowledgeable guidance to clients in bankruptcy-related matters. I am available to discuss your unique financial situation and will explore all possible legal options at your disposal — all in an effort to help you determine whether or not bankruptcy is the right option for you. My firm — Pytte Law — proudly serves clients throughout Savannah, Ludowici, Hinesville, Statesboro, Liberty County, and Wayne County, Georgia, so call today to learn more about how I can help you find debt relief.
First Step: Assess Your Current Financial Situation
If you are thinking about filing for bankruptcy or if you are trying to determine whether or not now is the time to file for bankruptcy, assessing your current financial situation is a good place to begin. Here are some essential factors to consider that can help you make an informed decision:
Consider Money Coming In vs. What You Owe
In certain situations, all you need to turn around your financial struggles is to make a few simple lifestyle changes. You can start by comparing your income with your debts. If you earn a decent income, you may have enough to repay your debts over a period of time by making simple lifestyle modifications. This may involve monitoring your spending habits and improving your saving habits.
How Much Debt Do You Have?
Another crucial step is to better understand the amount of debt you owe before making any major decisions. Debt loads with over 40% of your annual income can make it really difficult to keep up with monthly payments. Once you fall behind on payments, you can quickly become overwhelmed with debt. Depending on your unique circumstances, filing for bankruptcy may be an option worth exploring to achieve debt relief.
Are Collectors Calling?
If you are yet to file for bankruptcy, creditors and debt collectors are allowed to call and send you letters in an effort to collect what you owe. However, dealing with unceasing phone calls, texts, demand letters, and emails from collection agencies can be extremely stressful. Filing for bankruptcy will activate an "automatic stay" order that can put an immediate stop to all of these collection efforts.
Know Your Bankruptcy Options
Chapter 7 and Chapter 13 bankruptcy are among the most common bankruptcy options for individuals going through financial distress in Georgia.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also known as liquidation bankruptcy, helps consumers wipe out most of their general unsecured debt. A Georgia bankruptcy court will appoint a trustee to oversee your case. The trustee will gather and sell non-exempt assets to pay off your debts. Non-exempt assets that may be sold in a Chapter 7 bankruptcy case include vacation homes, second homes, stocks, family heirlooms, bonds, second cars, and other investments. The trustee will pay off your creditors using the proceeds from the sale of your non-exempt assets.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, also known as wage earner's bankruptcy, is available to people who earn a regular income but have fallen into significant debt. This bankruptcy option allows you to settle your debts through a structured repayment plan spread over a three- to five-year period. During this period you will repay your debts gradually using future earnings. In a Chapter 13 case, you will be allowed to keep your assets, including your home, cars, and other properties.
Which Debts Won't Be Forgiven?
It’s important to remember that not all kinds of debt can be wiped out through bankruptcy. The following debts will not be forgiven, even when you file for bankruptcy:
Fines and penalties
Whether you file for Chapter 7 or Chapter 13 bankruptcy, repaying these debts remains compulsory.
Consider Which Assets Will Be Affected
Despite what many people think, filing for bankruptcy won't leave you destitute. Although, depending on the bankruptcy chapter you petition for, some of your major assets may be at risk. These include:
Your Home: When you file for bankruptcy, you will be allowed to keep your primary home. However, vacation homes and second homes will be sold in a Chapter 7 case.
Your Car: Since the motor vehicle is often considered an exempt asset, you will be allowed to keep your car. However, if you used your car as collateral to take a loan, the creditor may be allowed to take your car after your bankruptcy petition.
Your Pension: Fortunately, Georgia state laws protect most pension plans and life insurance policies. Thus, when you file for bankruptcy, you will not lose your life insurance, pension, or retirement accounts.
Let Pytte Law Help
Filing for bankruptcy in the Commonwealth of Georgia is quite common. According to statistics from The American Bankruptcy Institute, there were nearly 28,000 business and non‐business bankruptcy filings in Georgia in 2020. These individuals didn't go through alone, and neither should you. An experienced Georgia bankruptcy attorney can help review your financial situation carefully, evaluate all of your possible options, and help you determine the best course of action.
At Pytte Law, I have the resources and experience needed to assist individuals and their families through the complexities of bankruptcy proceedings. As your legal counsel, I will assess your financial situation, educate you about your options, and help you choose the right option for you. I will guide you through every stage of the bankruptcy process and craft a strategic plan to protect your assets so that you can build a more stable financial future for yourself.
If you’re considering bankruptcy as a debt relief option, contact my firm, Pytte Law, today to schedule a case assessment with an experienced bankruptcy attorney. I can offer you the detailed legal counsel and reliable advocacy you need to navigate key decisions in your bankruptcy case. Pytte Law is proud to serve clients throughout Savannah, Ludowici, Hinesville, Statesboro, Liberty County, and Wayne County, Georgia — so call today to schedule your own case consultation.