There is a common misconception that seeking bankruptcy protection from creditors requires debtors to sell off most of their assets and property. The purpose of bankruptcy is to provide debtors a fresh start, which includes allowing them keep basic assets that they need to get back on their feet. Individuals who file for bankruptcy usually can retain most if not all of their property.
In a Chapter 7 bankruptcy, where a Trustee obtains control over an the debtor's assets, federal and state law can exempt certain assets from being sold off by the Trustee to satisfy creditors’ claims. The exemptions that are set out in the federal Bankruptcy Code are not available if you live in Georgia. Instead, you must use the exemptions allowed by Georgia state law, which in fact are quite generous. The assets you claim as exempt generally will not be seized by the trustee. Furthermore, any creditor liens on the exempt assets can be avoided.
Georgia exemptions fall into two categories: limited and unlimited. Properties allowed unlimited exemption include Social Security, veterans, unemployment, and workers’ compensation benefits. Also exempt are pensions, retirement funds, medical savings accounts and life insurance proceeds. Alimony and child support are generally exempt as well.
For other assets, exemptions are limited by a dollar amount. The principal limited exemptions under Georgia law are the following:
This covers the debtor’s principal residence up to an equity value of $21,500 or up to $43,000 for a married couple filing jointly for bankruptcy. If the equity value is less that the allowed exemption, the remainder (up to $10,000) can be used to exempt other property.
Motor Vehicle Exemption
You can keep a car with a value of up to $5,000. If your vehicle is worth more than that, the trustee can sell it and use the excess amount for paying creditors.
Personal Property Exemptions
Household goods, such as appliances, furnishings, clothes, books and musical instruments, may be exempted for up to $300 for each item and $5,000 in total. In addition, you can keep jewelry, up to $500 in total value, and items used in your trade or profession, up to $1,500 in value.
Wild Card Exemption
This can be used to protect any other property up to a total value of $1,200.
These limited exemptions are subject to changes in amounts or in other aspects that affect eligibility. A skilled bankruptcy attorney can help you effectively manage the exemptions in order to maximize the property that you can keep.
The experienced attorneys at Rountree Leitman & Klein LLC in Atlanta advise people throughout Georgia in bankruptcy and related debtor-creditor matters. Call us at 404-737-9623 or contact us online for a free bankruptcy consultation.
For many debtors, a successful bankruptcy filing results in the removal of crushing debt and a fresh start for their personal and financial lives. However, there is no guarantee that debtors who seek bankruptcy protection will receive their discharge. In fact, there are several reasons courts may deny your bankruptcy discharge.
Bankruptcy laws have strict procedural rules for debtors and their attorneys to follow. Failure to follow any one of those rules can cause a denial or dismissal of bankruptcy petitions. A denial means that you are found ineligible for bankruptcy discharge due to any of the following unlawful actions:
The Court and the Trustee expect complete and accurate disclosures of debts and assets throughout the bankruptcy process. Failure to provide accurate information to the Court may cause denial of the debtor's discharge and, in some limited cases, criminal prosecution.
A creditor or Trustee who believes the debtor is being untruthful or withholding relevant information can also file a complaint against the debtor, which results in litigation and the Court will ultimately hold a trial to resolve the dispute.
A denial can also occur if a debtor has been granted a discharge in the past. For instance, if a debtor files a Chapter 7 bankruptcy, and they previously filed under Chapter 7 within the previous eight (8) years, the new filing may be denied.
Unlike a denial, a dismissal of a bankruptcy petition is usually a temporary rejection. For example, the debtor must attend credit counseling sessions before you file a bankruptcy petition. Failure to attend the counseling sessions can lead to the dismissal of the debtor's petition at a very early stage. Since these are procedural dismissals, the Court may provide you the chance to cure the rule violations and continue with the proceeding.
The bankruptcy attorneys at Rountree Leitman & Klein LLC offer reliable representation and experienced counsel to clients throughout Georgia who are filing for bankruptcy. Call 404-737-9623 or contact us online to schedule a free consultation at our Atlanta office.
It’s important to understand that, once you file for bankruptcy, an automatic stay is put into place that prevents creditors from taking action against you or seizing your property during the proceedings. Regardless of whether you file for Chapter 11, Chapter 12, or Chapter 7, an automatic stay can provide crucial protection as you seek relief from unmanageable debt.
Specifically, the automatic stay in bankruptcy can help by stopping:
There are, however, certain circumstances in which an automatic stay may not help. For example, while the stay will prevent the IRS from seizing your property or issuing a tax lien, you may still be audited by the IRS or sent a deficiency notice. In addition, bankruptcy does not stop required child support. alimony payments or criminal proceedings.
In some cases, a creditor may be able to request that the automatic stay be lifted. In order to do so, the creditor must submit a motion to the court explaining why the stay should no longer be in place. If the court grants the motion, the creditor can move forward with their collection efforts.
If you filed for bankruptcy and your case has been dismissed within the last year, the automatic stay will only remain in place for 30 days, absent obtaining Court approval for an extension. Additionally, an automatic stay is not permitted if you’ve filed for bankruptcy three times in a year.
The knowledgeable bankruptcy attorneys at Rountree Leitman & Klein LLC assist clients throughout Georgia who are seeking relief from creditors and debt through bankruptcy. Call 404-737-9623 or contact us online to schedule a free consultation in our Atlanta office.
One of the most important features of the original CARES Act — the federal government’s response to the COVID-19 economic crisis — was the creation of the Paycheck Protection Program (PPP), which allows small businesses to obtain emergency loans to stay in operation. But regulations issued by the Small Business Administration made PPP loans unavailable to small businesses that had filed for bankruptcy. Now, the CARES II Act has made it clear that these loans can be secured by debtors seeking protection under Subchapter V, a simplified form of Chapter 11 reorganization for small businesses.
CARES II, formally known as the Consolidated Appropriations Act of 2021, came after a deluge of Subchapter V filings that resulted in part from the CARES Act’s raising of the debt threshold for eligibility. Businesses with debts of up to $7.5 million can now qualify for Subchapter V — double the original threshold of $2.725 million. However, the unavailability of PPP loans has made it difficult for Subchapter V debtors to get the credit they need to meet overhead expenses while the reorganization proceeding goes on. CARES II has addressed that problem.
The new law amends the federal bankruptcy code to allow a Subchapter V debtor to apply to the bankruptcy court for a PPP loan to help cover payroll, rent and utilities. If the money is used for those purposes, the loan may be forgiven or, if not, may be treated as a “superpriority” administrative expense, which means it can be paid off ahead of other debts. The loan may also be repaid under the Subchapter V plan of organization approved by the bankruptcy court.
CARES II provides further rent relief to small businesses in Subchapter V. It adds an additional 60 days to the existing 60-day grace period within which a debtor must begin paying rent, as long as the debtor has experienced “a material financial hardship due, directly or indirectly,” to the effects of the pandemic. CARES II also allows post-petition rent arrearages to be paid over the course of the reorganization plan, rather than requiring them to be paid in a lump sum prior to plan approval.
Another change is to give Subchapter V debtors additional time to decide whether to assume or reject a lease. The period is now 210 days — up from 120 days — with a potential 90-day extension. This helps small businesses avoid having to make quick, possibly bad, decisions about whether to close stores during the uncertain economic environment caused by the COVID pandemic.
The experienced Georgia attorneys at Rountree Leitman & Klein LLC, in Atlanta guide small businesses through the Subchapter V bankruptcy process. Call us at 404-737-9623 or contact us online for a free consultation.
Rountree Leitman & Klein, LLC's blog is a resource provided to clients, prospective clients, and colleagues that discusses issues related to Personal Bankruptcy, Business Bankruptcy, Collections, and Litigation.