Georgia Debt Reduction Laws

Under Georgia law, lenders can sue customers who do not pay their debts. Usually, the lender has four years to sue the delinquent consumer under Georgia state law. Credit-related lawsuits can lead to devastating financial consequences. Some debt reduction programs, including the federal bankruptcy process, can prevent the consequences of unpaid consumer-oriented bills.

Credit Counseling

Some credit counseling programs can help state residents get out of debt faster, notes the Georgia Department of Banking and Finance. But Georgia citizens should carefully research a credit counseling agency before using its services. Some agencies offer debt management plans, which allow a consumer to repay his debts at reduced interest rates. Also, credit counseling with a federally-approved agency is required before any Georgia resident can file a bankruptcy case.

Chapter 7 Bankruptcy

People earning less than Georgia's annual median income level can request elimination of many pre-existing bills under Chapter 7 bankruptcy. As of 2011, the qualifying income for a single Georgia resident was $39,384, while the figure for a couple was $52,024, according to the U.S. Trustee Program. A family of three could earn up to $56,682 a year, while a four-member household could bring in up to $69,239 annually. While Chapter 7 reduces a consumer's debt load, it does damage credit ratings for 10 years from the date of filing.

Chapter 13 Bankruptcy

Georgia residents who did not qualify for Chapter 7 or simply want to partially repay debts can file for Chapter 13 bankruptcy. A Chapter 13 plan takes three to five years to complete. During a Chapter 13 plan, a debtor cannot get new credit accounts without a Georgia bankruptcy judge's permission. Also, no type of bankruptcy covers recent tax bills, child support, alimony, court fines or bills charged right before requesting debt reduction. Only in rare cases of serious disability or a college's negligence will a Georgia bankruptcy judge forgive federally-backed student loans.

Asset Considerations

If you have resided in Georgia for at least two continuous years before filing bankruptcy, you can invoke state asset exemption laws to protect some of your property. As of 2011, you could keep up to $10,000 of homestead equity if you are single and up to $20,000 if you are part of a legally-recognized couple, notes Bankruptcy Action. You can also retain up to $5,000 in household goods, a motor vehicle worth up to $3,500 and $500 worth of jewelry.