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.
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.