Filing Bankruptcy in Georgia

Learn How Filing Bankruptcy in Georgia Affects Your Credit And Whether It Is The Best Option For You or Not

How bankruptcy affects your credit

When you file bankruptcy in Georgia your credit will be affected negatively. If you file Chapter 7 bankruptcy in Georgia your assets will be sold and the net profits will be distributed to your creditors. If you file Chapter 13 bankruptcy in Georgia you will make payment arrangements with all outstanding creditors to pay off balances due. Either chapter of bankruptcy filing and discharge will reflect on your credit report. When a bankruptcy appears on your credit, anyone reviewing your credit will automatically begin to question your creditworthiness. Some lenders will view a Chapter 13 bankruptcy in a less negative light than a Chapter 7 bankruptcy because your creditors are paid in full in a Chapter 13 bankruptcy, while your creditors in a Chapter 7 bankruptcy are often left without payment. Both types of bankruptcy are reflected on your credit report for at least seven years following the discharge of the bankruptcy in Georgia.

Why bankruptcy may not be the best option

Under the recently enacted bankruptcy laws, you will only be allowed to file a Chapter 7 bankruptcy if your income averaged over the last six months is less than Georgia's median income. If you do not meet these criteria, there are a couple of mathematical formulas which the Georgia bankruptcy court will use to determine if you can file Chapter 7 bankruptcy. If you have little in assets and large dischargeable debts, you would want to file a Chapter 7 bankruptcy. However if your income is too great to file Chapter 7 bankruptcy, filing bankruptcy at all may not benefit you because under a Chapter 13 bankruptcy, you will be repaying all of your creditors anyway.

Considerations in bankruptcy

Before choosing to file bankruptcy, you will want to consider the consequences of that filing will have on your credit and whether bankruptcy will benefit your financial situation. Because bankruptcy stays on your credit report for at least seven years, it can be difficult to obtain any sort of financing or mortgage after you have filed bankruptcy in Georgia.