In order to qualify to file Chapter 7 bankruptcy in Georgia you have to look at three things:
- Your average income over the 6 months prior to filing.
- Your normal monthly income.
- You assets.
The Means Test in Georgia
The means test (Bankruptcy Form 22C) is a financial worksheet. The bankruptcy “means test” determines whether your income is low enough for you to file for Chapter 7 bankruptcy. It’s a formula designed to keep high-wage earners from filing for Chapter 7 bankruptcy. High-income filers who fail the means test can use Chapter 13 bankruptcy to repay a portion of their debts but won’t be able to use Chapter 7 bankruptcy to wipe out their debts altogether.
Debtors are required to show their household income for the six months preceding the filing of their case. Income includes employment income, business income, pension income, and unemployment income. Income such as social security and disability income is not included in the means test.
The good news is that the chapter 7 means test isn’t for people who are completely broke and have no assets. You can earn significant monthly income and still qualify for Chapter 7 bankruptcy if you have qualifying expenses, such as a high mortgage and car loan payments (although they must be reasonable), taxes, and other expenses.
Here are some types of expenses that can be deducted:
- secured debt such as mortgages and car payments
- furniture payments
- healthcare costs
- health insurance
- mandatory retirement contributions
- charitable contributions
- care for the disabled
- education costs for dependents
An experienced Georgia bankruptcy attorney can review your income and expenses and let you know whether you will be able move forward with filing a Chapter 7 bankruptcy.
Normal Current Monthly Household Income
Your normal monthly income in reflected on Schedules I and J in your bankruptcy petition. You must include all of your income.
Here are some examples of income you should include:
- wages, salary, tips, bonuses, overtime, and commissions
- net income from the operation of a business, profession, or farm
- interest, dividends, and royalties
- net income from rents and other real property income
- pension and retirement income
- regular contributions to the household expenses of the debtor or the debtor’s dependents, including child or spousal support
- regular contributions by the debtor’s spouse (unless you are legally separated)
- unemployment compensation
- workers’ compensation insurance
- state disability insurance, and
- annuity payments.
Assets in Georgia Chapter 7 Cases
One of the most common questions about Chapter 7 bankruptcy is whether you can keep your property if you file for bankruptcy protection.
When you file a Chapter 7 bankruptcy you are ultimately looking to start over. The bankruptcy court understands that you need a bed to sleep on, clothes to wear, and a car to drive to work so that you can maintain a basic standard of living even after filing bankruptcy.
The bankruptcy law would not be fair if people who aren’t paying their debts are able to keep luxury items such as costly diamond jewelry, furs, and other luxury property that isn’t necessary for a new financial start.
For most people filing bankruptcy, you can protect your property from being sold by the trustee to pay your creditors by using the Georgia bankruptcy law “exemptions”. These exemptions protect property in Chapter 7 cases.