Common Bankruptcy Complications in Georgia: How an Experienced Attorney Can Help

Filing for bankruptcy can be a difficult process that will complicate your life temporarily, but its impact can be minimized with the aid of an experienced Georgia bankruptcy attorney. When going through a bankruptcy in Georgia, the last thing you would want to hear is that there are a few complications with your case.

If you feel like there are special circumstances that could complicate your Chapter 7 or Chapter 13 bankruptcy case, you should definitely inform your lawyer about it as soon as possible. While having an experienced and competent bankruptcy attorney in Atlanta or Alpharetta will make the process much easier, below are some of the common things that could complicate your Georgia bankruptcy case.

Unfiled Tax Returns in Georgia Bankruptcy

The act of not filing your tax return does not usually preclude you from filing bankruptcy in Georgia. But if you should have filed tax returns and did not, your bankruptcy case will most likely be more complicated. It becomes complicated because the Bankruptcy Court requires you to provide a copy of your most recently filed federal tax return (and sometimes the prior year’s as well) to the trustee within fourteen (14) days of your bankruptcy case being filed. If you have unfiled tax returns, the trustee in your case may be skeptical regarding your income and/or potential assets, and may delay your case’s resolution by asking for more documentation.

In addition, if you are not able to provide up-to-date tax returns, additional meetings with the trustee (341 Hearing / Meeting of Creditors) will be required, which both you and your attorney must attend. Sometimes, affidavits can be filed with the court attempting to explain why up-to-date tax returns are not available. However, at the minimum a tax transcript from the IRS of the last filed tax return will be required.

While we have found this is usually not a serious problem in straightforward Chapter 7 cases, it can be more challenging in Chapter 13 where current filings are needed for plan confirmation. So having current copies of your recently filed tax returns is important, and something to consider when filing a bankruptcy case in Georgia. In summary, it is best to not file a bankruptcy case unless you have a copy or transcript from the IRS of your last filed federal tax return in hand.

For more on Georgia tax filing obligations in bankruptcy, see OCGA § 48-7-82 regarding periods of limitation on tax assessments.

Tax Debts and Georgia Bankruptcy Discharge

If you owe a substantial amount of federal and/or state income taxes in Georgia, then it is most likely that your bankruptcy case will be complicated. A substantial tax debt is usually considered to be more than ten percent (10%) or more of your annual income. However, owing far less than that can cause someone having financial difficulty very significant problems. It becomes complicated because most tax debts are not eligible to be eliminated through bankruptcy under the federal “3-2-240 rule” (covering recent taxes due within three years, filed within two years, or assessed within 240 days).

If your attorney is willing to go the extra mile to investigate ways that you can eliminate your tax debt, such as for older, non-fraudulent returns, it’s worth paying additional fees to speak with an experienced Georgia attorney who can help you determine if your tax debts can be discharged in a Chapter 7 or Chapter 13 bankruptcy case. However, even if your tax debts are not eliminated in a bankruptcy case, they will be frozen temporarily by the automatic stay, and the elimination of other debts should make it much easier to concentrate on paying off any tax debts in a payment plan after your bankruptcy case is concluded.

In summary, older tax personal tax debts can often be discharged in a bankruptcy case, but only if they meet certain requirements. To qualify for discharge, the taxes must satisfy all of the following requirements:

3-Year Rule: The tax return must have been due at least 3 years before the bankruptcy filing date (extensions to file don’t count toward this period).
2-Year Rule: The tax return must have been filed at least 2 years before the bankruptcy filing (late-filed returns reset this clock).
240-Day Rule: The IRS (or state) must have assessed the tax at least 240 days before filing (assessment happens automatically upon filing or after audit).
No Fraud or Evasion: The tax debt must not stem from a fraudulent return, willful attempt to evade taxes, or false statements under penalty of perjury.

For details on Georgia state tax collection in bankruptcy contexts, see OCGA § 48-2-18 on bankruptcy filings and tax obligations.

Delinquent Mortgage Payments in Georgia Bankruptcy

If your mortgage payments are delinquent but you are set on keeping the property, there could be some complications in your Georgia bankruptcy case. For a little clarity, it is only complicated because you want to keep the real estate, if you don’t mind losing the real estate to foreclosure, there won’t be any complications. But if you are delinquent on making your mortgage payments, there will be a number of different things your lawyer will have to do to help you to keep your property. For example, if you are filing a Chapter 7 bankruptcy in Georgia, this could delay a foreclosure and give you time to catch up the mortgage, negotiate a short sale, or work on a loan modification.

However, a Chapter 7 doesn’t allow spreading arrears over time like Chapter 13 does. If you are filing a Chapter 13, the bankruptcy case will stop any foreclosure proceedings, and as a part of the case you will usually be in a payment plan to catch up the mortgage payments over 3 to 5 years. In any event, being behind on mortgage payments usually means a substantial amount of extra work for you and/or your attorney involved, which will make for some interesting complications in your Georgia home loan situation.

For Georgia-specific foreclosure procedures that interact with bankruptcy, see OCGA § 44-14-160 on filing of foreclosure deeds.

Wage Garnishments and Judgment Liens in Georgia Bankruptcy

If your paycheck is being garnished, filing for bankruptcy can usually stop it right away. A Georgia bankruptcy attorney can act quickly to get your case filed and notify your employer and the creditor, which puts an immediate stop to most wage garnishments under the automatic stay. Because time is often critical, your attorney may need to rush the filing process. When that happens, some paperwork might be completed after your case is filed, but that’s a normal part of handling an urgent situation.

If you own real estate, it’s possible that a creditor who sued you has already recorded a judgment, creating a lien on your property without you realizing it. Georgia’s homestead exemption can protect your home from being sold, but it doesn’t automatically remove the lien. To clear that lien, your attorney may need to file a motion with the bankruptcy court and possibly attend a short hearing.

This process, called lien avoidance, is usually available in Chapter 7 bankruptcy if the lien reduces the amount of equity you’re allowed to protect with your exemption. However, not all liens can be removed in bankruptcy, so it’s important to have an attorney review your specific situation. A knowledgeable Georgia bankruptcy lawyer can guide you through these steps and make sure your wages and property get the maximum protection allowed by law.

For garnishment protections and liens in bankruptcy, see OCGA § 18-4-4 on service of summons and bankruptcy proceedings.

Medical Debts Complicating Your Georgia Bankruptcy

It is not uncommon for you or someone in your family to have a large amount of medical debt, possibly leading or contributing to the filing of the bankruptcy case in the first place. Your bankruptcy may become complicated because medical debts typically do not show up on a credit report until much later when they are given to a collection agency. So every single medical debt will have to be provided by you to your bankruptcy attorney to be included in your Georgia bankruptcy case. To do this, you may need to go through all your bills from doctors and hospitals, and also let your attorney know the name of all the hospitals you have received treatment from. This can be very time-consuming work, as even a brief stay in the hospital can result in several providers sending you bills, including doctors you never met. In addition, doctors must usually send out to third parties to have tests run, and these diagnostic tests will also be billed separately from the doctor.

If any one of these medical bills shows up after you have filed your bankruptcy, your attorney must amend your case, send notice to the missing creditor, and sign and file an affidavit swearing that they have served this creditor according to the local bankruptcy rules. Keep in mind, though, that debts incurred after filing are not dischargeable. While medical bills are usually something an active and experienced Georgia bankruptcy attorney has to deal with on a daily basis, it does complicate a case and usually requires much manual work on the part of the filer and attorney.

For statute of limitations on medical debt collection in Georgia, see OCGA § 9-3-24 on actions for open accounts.

If you are facing bankruptcy in Georgia and need to speak with an experienced and effective attorney to help in your case, call us at 470-947-2471 to speak with one of our knowledgeable Georgia bankruptcy attorneys today.

Updated: 2026-01-26