Effective October 17, 2005, the new bankruptcy law requires an individual to receive a briefing from an approved non-profit budget and credit counseling agency prior to filing bankruptcy. By completing a counseling session, a consumer may have more knowledge about bankruptcy and thus may be better able to make an informed decision. In addition, before an individual can be discharged from bankruptcy, he/she will be required to participate in a financial educational course. This is to provide consumers with necessary financial skills and tools and to help avoid future financial problems.

Consumer Credit Counseling Service of Savannah, Inc. has been approved (*) by the Executive Office for U.S. Trustees (EOUST) to offer pre-filing bankruptcy counseling and pre-discharge bankruptcy education in all judicial districts in Georgia and South Carolina.

Bankruptcy serves two main purposes: First, bankruptcy is intended to give an honest debtor a "fresh start" in life by relieving the debtor of most debts. Secondly, bankruptcy repays creditors in an orderly manner to the extent that the debtor has property available for payment.

Nondischargeable debt: A debt that cannot be eliminated in bankruptcy is called a nondischargeable debt. There are various nondischargeable debts. Examples include debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or educational benefit overpayments, and debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs.

The two primary forms of Personal Bankruptcy are Chapter 7 and Chapter 13.

Chapter 7 , often called a liquidation, allows debtors a fresh start by requiring them to relinquish non-exempt assets, which are liquidated to pay creditors. In return debtors usually receive a discharge of their debt with the exception of certain types of nondischargeable debt. This form of bankruptcy provides for relatively quick elimination of most debts and does not require payments to creditors after the bankruptcy filing, as chapter 13 does. However, consumers with income over certain amounts may not be eligible to file a chapter 7. Credit reporting agencies may report a chapter 7 bankruptcy for up to 10 years.

Chapter 13 is designed for an individual debtor who has a regular source of income. This type of bankruptcy often enables the debtor to keep a valuable asset, such as a house. The debtor proposes a "plan" to repay creditors over time, usually three to five years. Unlike in chapter 7, debtors are not eligible to have their debts discharged in the beginning of the case. Credit reporting agencies may report a chapter 13 bankruptcy for up to 10 years.

Learn more about "Bankruptcy Basics" from the Administrative Office of the US Courts.

 

The information contained o­n this website regarding bankruptcy is intended as an overview and is not intended to be comprehensive.  Further, it is for informational purposes o­nly and is not to be considered legal advice.  You should consult with an attorney for advice about your specific legal situation.