Thomas F Tierney, Attorney at Law Bankruptcy Attorney





Bankruptcy Law

Thomas F Tierney, Attorney at Law Bankruptcy Attorney

Bankruptcy provides a fresh start to your credit, and if used correctly can greatly improve your credit.


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Thomas F Tierney, Attorney at Law Bankruptcy Attorney  
Frequently Asked Questions About Bankruptcy and the Options Available to You

Bankruptcy Relief from IRS and Georgia Tax Debts

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Most people are unaware that bankruptcy can be a useful tool in resolving tax debts. Generally speaking, if a Georgia or IRS
debt for income taxes is over three years old you can obtain a discharge in Chapter 7. If it is less than three (3) years old,
you can consider filing a Chapter 13 bankruptcy or a Chapter 11 bankruptcy and pay this debt over time.

The benefit to this is that interest and penalties stop while you are making payments via a plan, which makes this a better deal than simply working out a payment plan with the IRS or Georgia. I run into people who have been making payments for years under a payment plan, but the penalties and interest exceed what they are paying. In other words, the debtor will owe this money forever.

What if you have failed to file over years because you're afraid of the IRS and Georgia? I recommend that you go ahead and file your taxes. When the tax authorities contact you, work out the lowest possible payment plan. I don't care if it doesn't even
cover the interest and penalties. So long as you are paying, the government is happy. Make it a priority to pay your current taxes. After three years of paying on the old taxes, then file your Chapter 7. Another issue is what if I have failed to pay payroll taxes or sales taxes on my business? Although the business owes the taxes, the IRS and Georgia will go after the person responsible for these payments. In one case, a poor lady was hired by some shady businesses to organize and pay their payroll taxes. The shady businesses failed to give her enough money, and the IRS went after her personally because she wrote the checks!!! The best advice for this is to shut down the business, and wait for the authorities to chase you. Typically the IRS and Georgia will accept the basic amount owed without penalties and interest from an individual Please call if you have any questions.

Do I have to file bankruptcy?
What are the alternatives?

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There are basically two (2) reasons to file for Chapter 7 Bankruptcy. The first is to repair your credit. I know, this seems contradictory. But if you ever have looked at your credit report you will understand. Every month there is a list of your debts, showing whether good payments have been made. If you are simply letting the bad debt sit there, every month your credit is getting worse.

Do not be fooled by a debt being marked "Charged off". Often this just means that the debt was sold at a discount to some other creditor. You can still be sued for a "charged off" debt. The worst is when you have old debt and are waiting for it to fall off your credit. After years you might still be sued for the debt. Here is an article about a woman who won a judgment against Midland Funding when Midland failed to show up for Court. This shows how all this works. Charged off lawsuit

So the first advantage to filing bankruptcy is that all of your debt will show "discharged", so you will no longer owe the money. Imagine if you are a bank and two people request a loan with similar credit history. One shows debts "charged off" and the other shows discharged in Chapter 7. Who would you give a loan to? As the person who filed bankruptcy no longer owes the debts and as this person cannot file another bankruptcy for 8 years, you would more likely provide credit to the bankrupt person.

Bankruptcy provides a fresh start to your credit, and if used correctly can greatly improve your credit.

The other good reason to file bankruptcy is to protect your income and assets. Once a creditor obtains a judgment against you the creditor can garnish your wages and your bank account. A bankruptcy will stop the creditor from such actions.

An alternative to bankruptcy can be a simple as saving money to make an offer to the creditor. If you were to save $500.00 per month in a year you would have $6,000.00 saved. You may be able to offer a settlement to your creditors, especially on old "charged off debts". For example, a collection agency may take 50 cents on the dollar, but only on "cash" offers. So if you have saved $6,000.00 you may be able to settle a $12,000.00 debt. At that point your credit would reflect paid in settlement, which is better than leaving the debt or filing bankruptcy.

What's the difference between a Chapter 7 and a Chapter 13 Bankruptcy?

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In a Chapter 7 Bankruptcy you receive a full discharge of your debts usually within three months of filing. There is no payment plan and your credit will start rebuilding immediately. Usually there is only one creditor meeting to make sure your paperwork is filed correctly and is accurate.

In Chapter 13 Bankruptcy you repay all or part of your debt based on a budget prepared by your bankruptcy attorney. There is a trustee whose duty is to make sure the creditors get paid as much as possible under bankruptcy law. After a creditor meeting, there is a hearing to confirm your plan, and typically the trustee must agree to the plan. For example, if I owed $100,000.00 in debt and my budget showed I could pay $1,000.00 per month, I would repay approximately $60,000.00 over five years, or 60 percent of the debt. No interest would accrue on unsecured debt. You can also pay arrearages on a home and a car in Chapter 13. You do not get a discharge until the plan is complete. You cannot enter into debt while in Chapter 13 without Court permission.

I generally recommend filing a Chapter 7 due to the lower costs and quicker discharge of debts. Chapter 13 is appropriate if you are behind on your home and want time to make up payments. I never believe it is a good idea to file Chapter 13 to keep a car, as with the attorney fees and trustee fees you could buy a good used car. Most Chapter 13 plans fail, and the only benefit is to the attorney who gets paid first.

Often people file Chapter 13 because they cannot afford to pay an attorney up front, and respond to ads for low up front payments. This is a bad idea because in the end you will be paying way more money than if you found a way to file a Chapter 7. FAQ provided by Bankruptcy Court

Will I lose my house in bankruptcy? What about my car? Reaffirmations in Bankruptcy

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Many people are afraid to seek bankruptcy relief because they do not want to lose their house or their car. Often people will want to list their credit card debts in their Petition but not their mortgages or car notes, fearing that if the bank finds out, they will lose their home and car. Generally, you do not need to fear losing your house and car if you continue to pay these debts after the bankruptcy.

You have a choice when you file bankruptcy to "reaffirm" a debt, which means that you promise to pay the debt regardless of your bankruptcy filing. In essence, you make a choice to not obtain a "discharge" from certain debts. After you file bankruptcy, your bankruptcy attorney may contact your creditor and file out forms to reaffirm a debt. In my opinion, it is a good idea to do this when there is little money owed, a bad idea if there is a great deal of money owed.

For example, if I own a 2009 Toyota and only owe $3,000.00 on this car, a reaffirmation may be a great idea. A reaffirmation agreement must be approved by the bankruptcy court and show that you can afford the debt. A reaffirmation agreements helps you re-establish credit after your bankruptcy, however, if you owed a great deal of money on the car, I would not recommend it. The point of bankruptcy is to get a fresh start, and being stuck is old debt doesn't help.

Most lenders to do not insist on a reaffirmation agreement, and you can continue make payments on your house and car. If you do not reaffirm, usually you will not be able to pay online and you will not get credit for good payments nor dinged for late payments. The good news is that if the car blows a motor, you can stop paying on the car and let the creditor take it back. I never recommend reaffirming a mortgage, as you never know what might happen in the future. If you reaffirm a large debt and fail to make payments you can be stuck with the debt, unable to file bankruptcy again for 8 years.

Here is information from the Bankruptcy Court in Newnan Georgia regarding reaffirmation agreements.

I'm in trouble! What will happen if I file Bankruptcy?

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A bankruptcy can be a wonderful tool to get a fresh start. Job loss, illness, and yes, bad financial decisions can leave you and your family in a hole. The longer you do not fix this problem the worse your credit will get. You can face garnishment of both your wages and your bank account, leaving you unable to pay your living expenses.

The good news is that a Chapter 7 Bankruptcy can fix this. After filing bankruptcy all of your credit history will reflect "Discharged in Chapter 7", meaning that your credit will stop being dinged every month. Usually within several years your credit will rebound to an acceptable range. You need to use some credit (NOT MUCH!!!) after bankruptcy to re-establish credit.

A bankruptcy filing basically involves the following. Your bankruptcy attorney will prepare a Petition (like a lawsuit) identifying who you are and what type of bankruptcy you are filing. A Chapter 7 filing means that you are not going to repay creditors under an plan but seek to eliminate all debt. For most people this is the best choice. You must provide a list of all your creditors, including addresses and account numbers. You may then choose to reaffirm (promise to pay) some debts, such as car loans. The accuracy of the amount you owe is less important than having the correct address. Your bankruptcy lawyer will provide a list of all your assets, including clothes, bank accounts, and retirement accounts. A budget will show your monthly income and your expenses. Your bankruptcy lawyer will fill out a "means test", which is basically a summary of your last six months income less your expenses. Means Test Information The means test is designed to stop people who have plenty of income from seeking bankruptcy relief. The vast majority of people will pass the means test. You must provide paystubs, tax returns, and attend an online credit management course.

All of this information is filed as a PDF file with the bankruptcy court in Newnan Georgia, if you reside in Fayette County (Fayetteville and Peachtree City) and Coweta County (Newnan). A trustee, (who is not a judge but an experienced bankruptcy lawyer appointed to review cases) will conduct a meeting to make sure your filing is complete and accurate. He will look for assets to sell for creditors. Under bankruptcy law you can keep most of your property, including some equity in your house. Two months after your meeting you will be discharged from the debts. Please call if you have any questions.


Don't tackle such a complex legal issue on your own. Contact Thomas F. Tierney, Attorney at Law for all your Peachtree City, GA, bankruptcy lawyer needs.

Thomas F Tierney, Attorney at Law Bankruptcy Attorney

Thomas F. Tierney — your personal lawyer, serving Fayette and Coweta Counties: Peachtree City, Tyrone, Fayetteville, Sharpsburg, Fairburn, Senoia, and Newnan

Thomas F Tierney, Attorney at Law Bankruptcy Attorney


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