In a Chapter 7 bankruptcy case, a trustee cannot take away some types of income streams from you that are protected by the Georgia exemption statute.
Income streams that are protected by the Georgia exemption statute are:
- income received from unemployment
- veteran’s benefits
- disability benefits
- payments from a pension or annuity
- payment from an IRA
- payment from a 401k
- public assistance benefit
- social security
- a payment for loss of future earnings
- a payment from a life insurance policy that insured a person who supported you.
In contrast, some income streams are not protected. For example, let’s say you sold a house five years ago. Let’s say that the person who bought the house from you still owes you a payment of $2,000.00 per month for the next 10 years for this house. In this situation, you will lose your right to receive these funds if you file Chapter 7 bankruptcy.
In another example, let’s say you sold a car and someone still owes you $15,000 on it. Again, you will not be able to protect the income stream from this either.
It does not matter that an income stream is your sole source of income. A Chapter 7 bankruptcy trustee can still take it.
It is not uncommon for a person to come into my office with an expectation that they are going to be able to file Chapter 7 and eliminate all of their debts. Then, after we have written down a list of all their assets, I sometimes have to give them the bad news that they are not going to be able to file bankruptcy without losing this stream of income.
I absolutely hate giving people bad news. However, I would much rather give you bad news before a case is filed rather than have you find out in the middle of a court hearing.
It is extremely important that you disclose all of your assets to your bankruptcy attorney before a case is filed so that you will know if you are going to lose something beforehand.
Some people will choose not to file bankruptcy after they understand which assets might be taken away by a trustee.
One of the worst things about a Chapter 7 bankruptcy is that you can’t quit just because a trustee has decided to take one your assets. Once you are in, you will stay in unless you can persuade a bankruptcy judge to allow you to dismiss the case. If there is a possibility that a trustee is going to recover money for the unsecured creditors in the case, the odds of any bankruptcy judge letting you dismiss the case are pretty close to zero.
When you disclose all of your assets to your bankruptcy attorney before the case is filed, you will be able to make an informed decision as to whether or not you want to file bankruptcy.
3. How much does it cost to file?