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THIS DOCUMENT, WHICH IS BASED ON GEORGIA LAW, IS INTENDED TO INFORM NOT

TO ADVISE. NO ONE SHOULD ATTEMPT TO APPLY OR INTERPRET ANY LAW

WITHOUT THE AID OF A LAWYER WHO KNOWS CRIMINAL LAW AND COURT RULES,

BECAUSE THE FACTS OF EACH INDIVIDUAL CASE ARE DIFFERENT AND MAY CHANGE

THE APPLICATION OF THE LAW.

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WHAT IS A BANKRUPTCY?

Bankruptcy is a legal proceeding in federal bankruptcy court, by which

a person who has more debts than he or she can pay seeks relief from

those debts. The right to file a bankruptcy exists under the law, and

this law was designed mainly to take care of serious problems with

debts and to allow a fresh financial start.

The most common type of bankruptcy is straight bankruptcy. You may

also hear it referred to as a Chapter 7 or liquidation proceeding. A

person who files for such a bankruptcy is legally referred to as a

debtor; the former designation of "bankrupt" is no longer used. A

straight bankruptcy proceeding includes a court-administered sale of

any of the debtor's property that does not fall under the exemption

described below, with distribution of the sale proceeds to the

creditors (persons whom the debtor owes). The result of a successful

bankruptcy proceeding is a discharge in bankruptcy, which releases the

debtor from payment of affected debts. Most of the information in

this pamphlet deals with a straight bankruptcy proceeding.

There is also a special type of bankruptcy, called Chapter 13

bankruptcy. It is also sometimes referred to as a "wage-earner plan,"

although it is available to persons on welfare or with other kinds of

regular income. In a Chapter 13 plan, a person continues to pay off

debts under an installment payment plan administered by a trustee.

There are some advantages of Chapter 13 in dealing with secured

creditors, such as mortgage companies and banks, who might otherwise

repossess property of the debtor. And, a Chapter 13 plan may extend

the time to pay off debts and reduce the amount to be paid. The plan

suspends legal and collection actions against the debtor for the

period it is in effect, which is usually three or five years, and if

may also suspend such actions against persons who co-signed loans

with the debtor, such as friends or relatives.

WHO CAN FILE BANKRUPTCY?

In general, any person or business can file for bankruptcy. There is

no minimum amount of debt required; however, in most cases, a person

who files does owe considerably more in debts than he or she can pay.

WILL ALL MY DEBTS BE DISCHARGED

IF I FILE FOR BANKRUPTCY?

No. A debtor will still owe certain debts, including some taxes,

alimony and child support, fines and certain other non- dischargeable

debts.

WILL I BE ABLE TO KEEP ANY

PROPERTY IF I GO BANKRUPT?

Yes. Certain property is exempt from a bankruptcy proceeding and can

be debt by the debtor. There is a choice for the debtor between a

state or federal exemption standard.

The Debtors, aggregate interest, not to exceed $5,000 in value, in

real property or personal property that the debtor or a dependent of

the debtor uses as a residence, in a cooperative that owns property

that the debtor or a dependent of the debtor uses as a residence or in

a burial plot for the debtor or a dependent of the debtor.

If a husband and wife file together, the above amounts under the

Georgia standard are doubled.

There are other exemptions that apply to specific types of property

and situations.

The exemptions apply only to equity in real or personal property,

which means that if property has been placed as security for a loan

(such as a mortgage on a residence or a lien on the title of a car),

the availability of the exemption may be affected.

DOES MY SPOUSE HAVE TO FILE WITH ME?

No. Although one advantage of filing together is the doubling of the

amount of exemptions, there is no requirement that a husband and wife

file bankruptcy together. In some instances, if most debts are owed

only by one spouse, it may be appropriate for that spouse to file

alone. But, jointly owned property may be affected if only one spouse

files. And, in most cases, a husband and wife have the same debts or

have co-signed the same loan agreements. If only one spouse files in

this situation, the creditors can continue to demand payment from the

spouse who did not file.

WHAT IF I HAVE NO ASSETS?

Only property of the debtor which is not exempted is available to be

sold and used toward payment of debts. Many persons, including those

in low and middle income ranges, may only have property which falls

under the exemptions and therefore have no assets available to be sold

to pay creditors. The absence of such assets will not affect the

bankruptcy. And, as in cases where there are assets available,

creditors in a "no-asset" case will not be able to sue the debtor

after the bankruptcy is filed.

WILL I BE ABLE TO OWN ANYTHING

AFTER BANKRUPTCY?

As a general rule, there is no limitation on the future ability of a

debtor to own or acquire real or personal property. In most cases,

creditors whose claims are discharged in bankruptcy will not be able

to take property or earnings acquired after the filing of bankruptcy.

However, some special types of interests, such as inheritances,

property settlements, and life insurance proceeds, if acquired within

six months after bankruptcy, may become available for payment to

creditors.

HOW WILL BANKRUPTCY AFFECT MY CREDIT?

Bankruptcy may appear on a person's credit record for ten years. It

may hamper access to credit for a time. Yet, at the same time, a

person contemplating bankruptcy may already have a poor credit

rating. In some cases, bankruptcy may actually improve the ability to

obtain credit, since many of the debtor's former debts are

discharged. Your local credit bureau may be able to provide

information about the policy of lenders and creditors in your area

with regard to the effect of bankruptcy on a person's ability to

obtain credit.

HOW WILL BANKRUPTCY AFFECT PERSONS

WHO CO-SIGNED LOANS WITH ME?

A person who co-signed with you on a loan may still be held

responsible for the debt if you file for straight bankruptcy. A

Chapter 13 bankruptcy may suspend legal and collection actions against

your co-signers for some time. Your attorney will explain the effect

your bankruptcy will have on anyone who co-signed with you.

CAN MY CREDITORS PREVENT A DISCHARGE?

Under limited circumstances, a creditor may be able to block a

bankruptcy discharge of his debt. If a creditor can prove that he

gave a loan in reasonable reliance on a financial statement which was

false in important details and given with the intent to deceive him,

he may avoid having the debt discharged. If a creditor tries to avoid

the discharge for this reason and fails, the bankruptcy judge may

order the creditor to pay of the debtor's attorney fees and costs in

defending the action.

It is also possible for the bankruptcy court to set aside any transfer

of property made to conceal ownership or to avoid having it included

in the bankruptcy, or made to defraud creditors. If this happens, the

court can take the property and order it sold, with the proceeds

distributed to the creditors.

These are just example of problems that may occasionally arise in a

bankruptcy proceeding. They are among the many matters which you will

discuss with your attorney.

CAN I FILE FOR BANKRUPTCY MORE THAN ONCE?

Yes, but there may be a limit on how soon you can file. Six years

must expire from the date of a straight bankruptcy discharge before

straight bankruptcy can be filed again. Following certain Chapter 13

proceedings, there is no waiting period for the filing of a straight

bankruptcy. And, there is no waiting period at all for the filing of

a Chapter 13 bankruptcy after any prior bankruptcy.

HOW CAN I TELL WHETHER I SHOULD

FILE FOR BANKRUPTCY?

If you have only a few debts, it is advisable to contact your

creditors to try to work out a payment plan with them, rather than

filing for bankruptcy. Sometimes you can find assistance in avoiding

bankruptcy by contacting a local consumer credit counselling agency,

consumer credit bureau or legal services office.

If you feel bankruptcy may be necessary, you should consult an

attorney. If bankruptcy is appropriate, you will need an attorney to

handle the filing,explain all procedures, evaluate your exemptions and

non-dischargeable debts, and attend to all the other matters involved

in a bankruptcy proceeding. The attorney will also assist you in

determining whether a Chapter 13 plan may be appropriate for you.

HOW CAN I LOCATE AN ATTORNEY TO ASSIST ME?

If you have limited income and feel that you cannot afford a private

attorney, you should contact the legal services office nearest you to

inquire whether you qualify for assistance. The legal services office

will be listed in the yellow pages of your telephone directory under

the heading of "Lawyers" or "Attorneys".

If you want to locate a private attorney, but you do not know how to

locate one who handles bankruptcy matters, you may contact the lawyer

referral service for your county.