Bankruptcy

• Bankruptcy no longer carries the stigma that it once did, and it can be seen as an honorable way for a person to get back on his feet. Chapter 7 is the most popular bankruptcy option. In a Chapter 7 bankruptcy, the debtor keeps property that the state finds essential for living, while any other property owned by the debtor goes toward the payment of his creditors.
  
  

Filing

• A debtor must file a Chapter 7 petition, schedules and a statement of financial affairs with the bankruptcy court to begin the bankruptcy process. The filing fee is $299, and once the case has been filed a bankruptcy trustee will be appointed to the case.
  
  

Means Test

• A debtor who wishes to go forward with a Chapter 7 bankruptcy case must prove that that he will not be able to pay his debts otherwise by way of a means test. The means test is a comparison of the debtor's family income to the Georgia state median family income. Census.gov places the Georgia state median family income at: $55,258 for a two-person family; $61,104 for a three-person family; $68,502 for a four-person family; $63,364 for a five-person family; $64,654 for a six-person family; and $59,212 for a seven-or-more-person family. If the debtor's family income is below or equal to the median, he can complete his Chapter 7 case. If not, the debtor must convert to Chapter 13 or find some other remedy.
  
  

Property

• Property that the state of Georgia deems necessary for the debtor to maintain his livelihood will be classified as exempt and out of reach of creditors. Any other property owned by the debtor will be subject to sale by the trustee. Once the trustee sells the property, she will use to proceeds to pay creditors. Exemptions vary by state. A debtor should consult his state laws before deciding on bankruptcy, because exemptions can change.
  
  

Exemptions

• The current exemptions that will apply to Atlanta debtors are: interest in real or personal property used as a residence or burial plot up to $10,000, up to $20,000 if married and filing jointly; up to $5,000 in household furnishings and goods; up to $500 in jewelry; prescribed health aids; Social Security, unemployment compensation, local public assistance and veterans' benefits; disability, illness or unemployment benefits; crime victims' compensation; alimony or maintenance payments; pensions and individual retirement accounts; professional books and tools of debtor's trade up to $1,500; payment for certain civil actions; unmatured life insurance; loan value on unmatured life insurance contract up to $2,000; and up to $600 on any other property plus any unused portion of the homestead exemption up to $5,000.