FAQs
What is bankruptcy?
Bankruptcy is a legal process governed primarily by Federal law and contained in the “Bankruptcy Code” and the “Bankruptcy Rules.” The U.S. Bankruptcy Code was substantially rewritten in 1978 to make bankruptcy relief more accessible and remove the stigma. Political pressure from creditors forced major changes to the Code in 2005 which imposed many new restrictions on debtors, the most notable of which was the “means test.”
Congress, with the aid of the credit lobby, invented “means testing” hoping to divert certain debtors from Chapter 7 into Chapter 13 repayment plans. The Act also limited protection of the “Automatic Stay” for repeat filers.
The primary purpose of the Bankruptcy Code is to provide a debtor with a “fresh start” through which certain debts can be paid, restructured or discharged without repayment.
It begins with the filing of a petition disclosing the assets and liabilities of an individual or a company. At the conclusion of the case, some or all of the debts involved will be discharged, or canceled.
Bankruptcy laws give you significant protection from creditors, but also attempt to strike a balance between your right to a discharge of debt and creditors’ right to be repaid.
The terms Chapter 7 and Chapter 13 refer to specific sections of the Bankruptcy Code. Chapter 7 often is called “straight bankruptcy” or “liquidation.” Chapter 13 may be referred to as a “wage-earner” or “debt consolidation and repayment” plan. Chapter 11 refers to reorganization of debts, usually by a partnership, corporation or high-income individual; while Chapter 12 is devoted to family farmers. Neither Chapter 11 or Chapter 12 is covered on this site.
See Bankruptcy Services for more detail about how Chapter 7 and Chapter 13 operate.
Is Martin Law the right firm for me?
Our clients are not looking for the least expensive lawyer. They are looking for a personalized approach and an experienced team to help them with the details of their unique case. Most of our clients never imagined they would be in a position requiring our help.
Our clients require our expertise because they often:
Have above average income
Are educated professionals
Have complicated cases
Own a business
Are elderly persons who have assets of value or other special issues
Are looking for outside-the-box solutions
Why should I hire your firm instead of a high-volume firm?
High-volume bankruptcy firms may do a competent job in simple cases. But often when you retain such a firm, you may work with a legal assistant, paralegal, or an inexperienced lawyer. Small firms may just dabble in bankruptcy law alongside practicing criminal law and handling divorces. Don't trust your financial future to a dabbler—select a lawyer who really knows the law!
I concentrate my practice on bankruptcy law and related debt relief issues which help individuals and small businesses. Bankruptcy law changes constantly and you can't expect a lawyer who handles any case that comes in the door to be up to date. When other bankruptcy lawyers don't know the law, they ask me. When have cases they know are too complex for them, they refer those clients to me.
At Martin Law we understand that no two cases are the same. Your individual situation needs to be addressed by an experienced attorney who will create a specific solution for you. I have over 29 years experience in Georgia bankruptcy cases and handle debt relief matters exclusively. I will manage your legal issues personally and lead you through the process.
I heard about your firm from a letter I received in the mail. How did you get my name and address?
You received a letter from us because a lawsuit or garnishment was filed against you in a county court. Like many lawyers, we subscribe to a service that reviews these public records and provides us with your information so we may send you a letter to introduce ourselves, offer a free consultation and give you information that may help you with your situation.
Is it expensive to file for bankruptcy?
At The Martin Law Firm we never charge for a routine initial consultation. The cost of our services will always be a small fraction of the total debt you are discharging. After we have all of the information needed to evaluate your case we will quote you a fee that will include all normal services in a bankruptcy case. Once I understand the details of your case I will give you a written contract that specifies the services I will perform and the cost of those services before you will be obligated to pay anything.
I have been told I must attempt a debt repayment plan with a credit counseling service before I can file my case. Is this correct?
No, the law states that you must take a short class from an approved credit counseling service before filing for Chapter 7 or Chapter 13. You will not be required to enter into a repayment plan and you should not attempt a debt repayment plan without appropriate guidance. Treat the counseling like the defensive driving course you would take if you got a traffic ticket. It is required but is an informational course only. This may be done online or by telephone and takes about an hour. We refer to this as your “ticket in.”
If you contact our office we’ll arrange for you to go through an approved counseling service provider. You should consider, however, that the credit counselor probably attended a short training course. Roderick H. Martin has over 29 years of experience in hundreds of cases and will be able to give you better advice than the counselor.
What is the difference between Chapter 7 and Chapter 13?
Chapter 7 is often called straight bankruptcy while Chapter 13 is referred to as a debt adjustment or debt consolidation plan. Under Chapter 7 you may discharge all or some of your unsecured debts. In a Chapter 13 you must propose a plan to repay all or some of your debts out of future income, generally over 36- or 60-month period.
When will my creditors stop calling me?
Filing either a Chapter 7 or a Chapter 13 will immediately stay, or suspend, most collection efforts — even if the creditor is unaware of the filing. The “automatic stay” also prevents creditors, in most situations, from filing or continuing lawsuits, garnishments , foreclosures and repossessions.
Will I lose my property if I file under Chapter 7 or 13?
This is one of the most critical assessments you should make in considering the filing of Chapter 7 or Chapter 13, because even a single innocent mistake could cause you to lose valuable property.
Only by making a detailed analysis of your assets and liabilities and personal circumstances can we make that determination. This is where 29 years of expertise can make a difference.
Must my spouse file bankruptcy with me?
Many married debtors file alone and their spouse is not affected. Unless both names are on the debt, an individual filing may be possible.
How long will it take to complete the process?
In routine Chapter 7 cases you will typically receive a discharge of your debts approximately 120 to 150 days after your case is filed. In a Chapter 13 case you will enter into a 36- or 60-month repayment plan and receive your discharge after all plan payments are completed.
What is a discharge, and which debts are discharged?
A discharge under either Chapter 7 or 13 releases you from personal liability for a debt and prohibits a creditor from taking any further action to collect the debt. A discharge may release you from debts such as credit card purchases, medical bills, debt owed on a repossessed vehicle, certain civil judgments, rental payments on a home where you no longer live, and signature loans (loans not secured by collateral).
Which debts generally are not dischargeable?
As a general rule, tax liability for recently filed or unfiled tax returns, some student loans, and all alimony and child support debts. Debts incurred through fraud or theft are also not dischargeable. Damages resulting from alcohol or drug-related automobile accidents may not be dischargeable. There are exceptions to these general rules, and there are additional categories of non-dischargeable debts as well. For example, credit card purchases of luxury goods or services, or cash advances from credit cards made shortly prior to filing may not be dischargeable. Additionally, debts secured by collateral or by liens on your property may not be dischargeable unless that property is surrendered to the creditor or the lien is “stripped” or “avoided.”
If I file Chapter 7 or 13, do I have to include all my debts or only those I want to discharge?
All your creditors must be listed, but you may want to, or need to, reaffirm (maintain) accounts such as your home, vehicles and certain other debts. Once your debts are discharged, you may choose to make voluntary payments to family or medical providers, or anyone else as you see fit. (Sidebar—Mark Twain filed bankruptcy in 1894, and by 1898 had repaid all his former creditors.)
What happens if I forget to list a creditor in my schedules?
Occasionally clients will call and tell me they’d forgotten to include a creditor in their scheduled list of creditors and ask what I advise them to do.
If your case is a “no-asset” Chapter 7, meaning that all of your property is “exempt” (protected) from being sold for the benefit of unsecured creditors (as in more than 90% of cases), then Georgia practice is that there is no need to amend your schedules to give notice to the unlisted creditor. This is simply because that creditor would not have received anything had they in fact been timely notified. Therefore even an unlisted debt in a no-asset case is officially discharged.
Now this rule applies only in a no-asset Chapter 7. If your case is a Chapter 13 case, or a Chapter 7 case where assets are to be liquidated and made available to unsecured creditors, then a creditor who is left out is harmed financially by not being notified of the case. Therefore, such an unlisted debt would survive the bankruptcy and you would still be liable for the money owed that particular creditor. This rule is one of the many, many reasons to not attempt to represent yourself, and to seek experienced counsel when you do seek representation.
Is there is a minimum amount of debt required to file bankruptcy?
There is no minimum. In theory you could file for bankruptcy protection even if you only had $1,000 in debt. But since it costs more than that to file, that wouldn’t make sense. For those people with nominal amounts of debt, our debt settlement services are often the most cost-effective solution to resolving the problem and improving your credit score.
Won’t filing Chapter 7 or 13 ruin my credit score?
Truth be told, by the time most clients seek my help their credit score has probably hit rock-bottom already due to late payments, charge-offs, repossessions and collections. In cases I’ve seen, a discharge of unsecured debts can improve a credit score by 100 -200 points!
My employer just received an order to garnish my wages, so why don’t I see any judgments on my credit report?
In July, 2017, the three major credit reporting agencies opted to no longer report certain public records such as civil judgments. Public records were deemed as too unreliable and errors had created harsh consequences for consumers.
Is there a maximum amount of debt I can have to qualify?
There is no limit to the amount you can include in Chapter 7, but there are debt limits in Chapter 13. Contact us to find out whether you qualify for either Chapter 7 or 13.
Can I charge up credit cards just before filing bankruptcy?
Debts incurred shortly prior to filing, or after you realize you can’t repay them, may have to be repaid; even if you subsequently file for bankruptcy relief.
What are the religious views on filing bankruptcy?
The Old Testament scripture provided for the discharge of debt: "Every seventh year you shall grant a remission of debts. And this is the manner of the remission: every creditor shall remit the claim that is held against a neighbor, not exacting it of a neighbor who is a member of the community, because the Lord’s remission has been proclaimed. " (Deuteronomy 15:1-2, NRSV).
Likewise, U.S. law provides for the discharge of debts in Chapter 7 every eight (8) years.
The lesson appears to be that forgiveness is an essential part of spiritual life so both the Bible and the law provide help for those with unmanageable debts.
If you feel like you’ve run out of options, call us today.
Can I continue to give tithes and offerings if I file bankruptcy?
Yes. I frequently counsel clients who feel strongly about making tithes and offerings to their place of worship.
While historically it was not always the case, current law allows individuals to give as much of their income to bona-fide charitable institutions as desired provided, however, the charitable giving can be documented and is in line with past practices and not merely a recently-devised strategy to help in filing a Chapter 7 or Chapter 13. The Means Test which determines eligibility for filing Chapter 7 bankruptcy allows a deduction for ongoing charitable giving and can aid in someone qualifying for Chapter 7. Likewise, Chapter 13 filers can use charitable contributions to legitimately reduce their disposable monthly income which will in turn can reduce the monthly Chapter 13 plan payment. Those filing Chapter 13 have the right to include charitable donations as a reasonable expense in monthly budgets as long as there is no calculated attempt to avoid repaying creditors. Thus, it is important to be able to prove ongoing giving through canceled checks or by requesting a charitable giving statement from the charitable organization.
Do our laws support bankruptcy?
The U.S. Constitution provides for the right to file bankruptcy. The U.S. bankruptcy laws specifically give debtors the right to a fresh start through filing bankruptcy.
I have heard banks and credit card companies lost a lot of money due to foreclosures and bankruptcy filings. I feel obligated to pay my creditors.
Credit card companies—and countless big banks—received billions of dollars in public funds (your tax dollars) to ease their burden when they faced financial problems in 2009. It was just good business. You should view your situation the same way. These companies know and expect that people will do anything to avoid filing for bankruptcy, including borrowing from relatives, putting second mortgages on their homes, or borrowing from retirement funds. Often they encourage you to do something that is not in your best interest because they profit from your misfortune. This is the time to put your own interests, and that of your family, ahead of the banks.
How long will a Chapter 7 or Chapter 13 be reported on my credit history?
The Fair Credit Reporting Act (“FCRA”), a Federal law, requires credit reporting agencies to remove bankruptcy case information from all consumer credit reports ten (10) years after the “order for relief is entered.” See 15 U.S.C. 1681c(a)(1).
But what is an “order for relief” and when is it entered? The United States Bankruptcy Code states that the filing of a Chapter 7 or Chapter 13 petition constitutes an order for relief. Therefore, the 10-year period is measured from the filing date of the case. See 11 US.C. § 301.
Information about your Chapter 7 or Chapter 13 must therefore be removed from your credit report no later than 10 years after the date you filed. For example, if you filed under either chapter on January 1, 2015, the case information must be removed from your credit report no later than December 31, 2024.