Filing for bankruptcy is a decision that takes time to consider. Many factors are involved, and many people who are thinking of filing for bankruptcy are understandably worried about losing their assets. As is standard with any legal matter, reviewing Georgia’s bankruptcy code and consulting with a qualified bankruptcy attorney are the best places to start.
It is worth noting that bankruptcy exemptions are mostly factors for people intending to file for Chapter 7 bankruptcy, where asset liquidation is significant. If an individual is eligible for Chapter 7 bankruptcy, he or she has to petition for property exemptions in order to keep necessary assets. After that, a bankruptcy trustee can sell non-exempt assets.
Chapter 13 bankruptcy involves rearranging your debt load more than liquidating, but it is worth understanding exemptions just in case. However, Chapter 13 bankruptcy has to include the larger amount of the total value of the nonexempt property equity or the disposable income in your repayment plan.
When Can You Use Georgia Bankruptcy Exemptions?
In order to file bankruptcy in Georgia, you have to live in the state for at least 180 days. However, that doesn’t mean you can use Georgia exemptions. To be able to use exemptions, you must be a Georgia resident for at least two years or 730 days.
Although bankruptcy cases are handled in federal bankruptcy courts, under the rules outlined in the U.S. Bankruptcy Law, federal law also allows states to create their own rules regarding bankruptcy exemptions. The State of Georgia has its own rules regarding which property residents filing for bankruptcy can keep and protect from creditors.
Some states let their residents who file for bankruptcy choose between state and federal bankruptcy exemptions. However, the State of Georgia is not one of those states. Georgia doesn’t recognize federal exemptions; you can only use state exemptions.
Common Georgia Bankruptcy Exemptions
In terms of exemptions specific to Georgia, some of the exemptions that bankruptcy filers should be aware of are as follows. These are homestead exemption, personal property exemption, motor vehicle exemption, support exemption, wage exemption, public benefits exemption, tools-of-the-trade exemption, pension and retirement exemption, wildcard exemption, and insurance exemption.
There are other bankruptcy exemptions you can use along with Georgia’s bankruptcy exemptions including the federal nonbankruptcy exemptions and tax-exempt retirement accounts. Also, bear in mind that spouses are usually allowed to double the exemption amount if they file for joint bankruptcy and own the property together.
Georgia Homestead Exemption
Losing a home can be the scariest aspect for many people when considering bankruptcy. However, this exemption can allow some homeowners to keep their properties. Georgia provides an exemption of up to $21,500 per person, or $43,000 if married co-habitants file for bankruptcy together. This amount goes against the total equity held in the homestead. In addition, those who don’t fully use all the homestead exemptions can use up to $10,000 of the unused portion to protect other property under the wildcard exemption.
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The Personal Property Exemption
Georgia’s personal property exemption limit is $5,000, which ends up being higher than you might expect as most people’s items have depreciated over time and may not be worth much in resale value. Be aware that each item has a cap of $300, so while an item valued at $2,000, for example, is below the $5,000 exemption limit, it is $1,700 above the single item limit, which indicates that you should sell it.
Comparatively, an item worth $350 might cost the owner more to sell than the $50 that puts it over the limit. In this circumstance, the object usually stays in the owner’s possession.
Georgia bankruptcy law also allows keeping some of the jewelry, and the exemption limit is up to $500.
The Wildcard Exemption
The wildcard exemption is a way for bankruptcy filers to have another opportunity to keep their assets. In Georgia, you are allowed up to $10,000 in leftover equity money from the unused homestead exemption to be applied to another exemption, along with $1,200 it provides to protect anything else.
A wildcard exemption is quite handy because it lets you protect the property you wouldn’t be able to under some other circumstances. So, it can be used to protect valuable property that has a sentimental value or any other property you own.
The Motor Vehicle Exemption
The motor vehicle exemption in Georgia is up to $5,000 in equity, which means that if the owner(s) of a vehicle has less than a $5,000 stake in it, they can keep it. It is vital to be aware that the wildcard exemption also has ramifications for motor vehicle exemptions.
If you have used $10,000 or less of your homestead exemption, you can put that amount toward retaining more expensive vehicles.
Individuals who are filing bankruptcy are allowed to keep either 75% of weekly disposable earnings or 40-times the state or federal hourly minimum wage, whichever amount is greater. Judges of Georgia bankruptcy courts may allow more earnings to be kept by low-income debtors.
The Support Exemption
An explicit exemption, Georgia protects all child support and alimony proceeds assigned by the court as necessary.
This list of exemptions is not exhaustive, and if only a few of these options apply to your situation, there may be others not listed here that do as well. For example, social security benefits and unemployment benefits are public benefits that are exempt in full. Also, up to $1,500 of the books or tools you need to pursue your trade are also exempt.
Take the time to speak with our bankruptcy lawyer either by phone or through our website’s live chat feature to get information tailored to your needs. Bankruptcy doesn’t have to be scary, and being informed is the best way to protect yourself and your family.