When the new bankruptcy law went into effect in mid-October of 2005, Georgia was one the states that most pundits expected would see a serious reduction in the total filings, and although it did, it was not as serious of a drop off because Georgia has always had a greater percentage of people filing Chapter 13 bankruptcy than other states, which is the type of bankruptcy being forced upon more debtors because of the new law.
Bankruptcy reform now requires anyone whose income exceeds the median for their state to pass the means test in order to qualify for Chapter 7. The means test is a formal examination of a consumer’s income and expenses to determine whether enough money can be squeezed out for them to be put on a Chapter 13 payment plan. If it is determined that you can reasonably afford to pay off at least part of your debt, the court will order you to turn over all of your disposable income to a trustee for a period of three to five years before your financial obligations are finally discharged. Needless to say, a Chapter 13 bankruptcy is hardly an ideal solution for credit card debt. Recorded below is the median income for various sized households in Georgia from 2006.

2-person families: 50,001
3-person families: 57,254
4-person families: 66,711
5-person families: 61,526
6-person families: 61,997
7-or-more-person families: 55,871

Georgia Consumer Credit Counseling Services
Georgia Bankruptcy Laws
Georgia Debt Collection

Bankruptcy Statistics in Georgia

2004: 75,870
2005: 79,273
2006: 39,142

Georgia is a state that historically has had a large number of consumer bankruptcy cases filed each year by population. Some credit advisors argue that fundamental issue is that strict state laws dealing with missed mortgage payments contribute to higher than normal foreclosure and bankruptcy rates. Georgia laws allow less than one month for homeowners who have received a foreclosure notice to stop the sale of their house, which prompts a high number of these people to file Chapter 13 to cease any collections activities, at least temporarily. Others experts point to the increasing popularity of riverboat casinos in the state as a basis for the high personal bankruptcy rate. Despite this, the drop off in filings after the new bankruptcy law was implemented was significant. Between 2005 and 2006 the total number of consumer bankruptcy filings decreased by 40,131, or 50 percent. Although the reduction is staggering, the overall percentage decline was far less than most states. Florida, for example, saw a decrease of more than 75 percent.