The cash exemption is often a major consideration for Georgia consumers who are considering filing for bankruptcy. Especially during tax refund season, I often have clients who will ask, “How much of the cash in my bank account can I keep if I file bankruptcy?”
In Georgia bankruptcy cases, the answer to this question is a maximum of $5,600 for individuals and $11,200 for married couples (see GA Code 44-13-100). However, if you have maxed out the exemption on your house, you will only be able to protect $600 for individuals and $1,200 for married couples. Do you have more than $20,000 equity in your home in Georgia? If the answer is yes, then you most likely are going to max out the exemption on your house. To know for sure, we need to talk so that I can review your entire situation.
In situations where a person has too much money in their bank account, you may need to wait to file. People in this situation may need to go ahead and catch up that utility bill, make that house payment, get the roof fixed, buy some tires for the car, pay the cell phone bill, catch up on the daycare bill or other household expenses.
Some Georgia consumers come into my office with the misconception that they can’t have any money in their bank account if they file bankruptcy. This situation can be problematic in Chapter 13 cases. While you are in Chapter 13, you cannot use any credit cards or incur any new debt without permission from the Bankruptcy Court. As a consequence, if you file Chapter 13 while having no money saved in your bank account, you are going to be in a serious pickle when the car brakes down, the stove breaks, the roof starts leaking or some other emergency hits you from nowhere. The best case scenario is to have at least a few thousand dollars in an emergency fund before you file bankruptcy.