The purpose of this blog is to give you a rough idea about why you must know the value of your house before you file bankruptcy in Georgia. Under Georgia Law, a single person can exempt a maximum of $10,600 of equity in their house when they file either Chapter 13 or Chapter 7 For married couples, the maximum exemption is $21,200.
Lets say a married couple has a house worth $100,000. They owe $70,000. Their equity in the house is $30,000. If we subtract the the exemption amount of $21,200, we are left with $8,800. In a Chapter 13, the person will have to pay back $8,800 to the unsecured creditors to protect the house.
In this situation, if the couple owes $100,000 in credit card debt, they will have to pay back only $8,800 assuming they pass the means test and their income and budget justify a composition chapter 13 plan.
Could a person in this type of situation roll the dice and file Chapter 7 ? Some lawyers roll the dice…….I don’t. Some lawyers will argue that the cost to the Chapter 7 trustee in marketing the property and closing the deal will exceed $8,800 in transaction costs. It might. Why take a chance with your house?
A good place to start when determining the value of your house is your tax bill. Somewhere on your property tax bill, it will state “estimated fair market value.” Another way to determine the value is to call a realtor and ask them to give you an estimate on how much you should ask for your house if you were going to sell it. The best way to determine the value is to get a professional appraisal.
Remember, there are exceptions to exceptions. Don’t read this blog as legal advice. If you want legal advice, you should call me at 706-295-0030 for your free consultation so we can see how the law applies to your situation.