For those who wish to file for bankruptcy but wish to protect some or all of their assets, it may be critical to utilize federal and state exemptions. An exemption is a rule that allows for a debtor to maintain some property even if he or she claims to be insolvent. In simpler terms, you may be able to keep some of the assets you own if they fall under these exemptions. In Georgia, bankruptcy filers must use the exemptions listed in Title 44 of the Georgia Code. Exempt assets in bankruptcy cannot be claimed by the bankruptcy court or lenders.
What Is State Law on Exempt Property in Georgia?
Georgia state laws provide very specific protections for the bankruptcy estate. Take a closer look at some of the exempt assets in bankruptcy as they apply to Georgia.
Motor Vehicle Exemptions
Georgia bankruptcy law states individuals filing for bankruptcy may claim any number of vehicles as long as the value of all vehicles combined is less than $5,000 for individual bankruptcy filing or $10,000 for married joint-filing debtors. Many times, this is enough to protect one or two vehicles, depending on their value.
If there is a loan on the vehicle, the bankruptcy trustee will look at the value of the vehicle and the amount owed on the loan. There are two key concerns here. First, if the equity in the vehicle is under the $5,000 exemption, the vehicle maintains protection.
In situations where the vehicle seems to have more than $5,000 worth of equity, the trustee looks a little deeper. The as-is cash value must be determined. For example, let’s assume a borrower owns a vehicle with a fair market value of $10,000. He or she has a loan on the vehicle and owes $3,000 on the vehicle. Initially, the equity is over the value of $5,000 that is protected by the exemption. However, this is not the as-is cash value. As-is vehicles need reconditioning and repairs before they can be sold for that value. For this reason, the vehicle’s as-is value may be only $7,000. The bankruptcy trustee considers this when determining if a vehicle has protection.
Many people worry they will lose their home in Chapter 7 liquidation. It is true this could happen. If you own your home outright or your home’s equity is above the state’s exempt level of $21,500, you may not be able to protect it. If you file jointly, the home’s equity cannot be more than $43,000. As much as $5,000 of this can be applied to a wildcard exemption.
As with vehicles, the bankruptcy trustee must determine what the as-is cash value of the home is. This may be just 60 percent of the fair market value of the home. If a cash buyer approached you to buy your home, this may be all they offer.
Current Wage Exemptions
When filing Chapter 7 bankruptcy, know that it is a fluid process. This means that at any given time, you may have some cash in the bank. Georgia’s bankruptcy law states that up to 75 percent of a debtors current wages are exempt. This means that up to 75 percent of the amounts in your checking and savings accounts are exempt.
Individuals with a retirement account, including an IRA, 401(k) or other accounts have full protection for those assets from the bankruptcy case. Unemployment benefits, workers’ compensation benefits, public assistance benefits, veterans’ benefits and Social Security disability payments or income are also exempt.