Bankruptcy is a traumatic experience for anyone, but knowing your rights can make it just a little bit easier. For instance there are exemptions that each state has that will protect the value of some of your belongings, including your house, care and certain retirement accounts.
So if you live in Georgia, knowing what the local bankruptcy exemptions allow will enable you to assess what property you are legally able to keep, and help determine exactly how much you will need to repay creditors. This is important, since federal bankruptcy exemptions are not permitted in Georgia, even though they are an option is some American states.
It is comforting for those filing for bankruptcy in Georgia to know that they are protected to the extent that they are able to keep enough property to maintain a basic lifestyle, and continue working after bankruptcy, rather than being stripped of everything they own – even though federal bankruptcy exemptions are not applicable.
If you’re planning to file bankruptcy in Georgia, you are obliged to use Georgia’s own state exemptions. However, there are some federal non-bankruptcy exemptions that may be used in addition to the most common Georgia property exemptions. These include disability benefits as well as military and federal retirement accounts that can be protected when you file for bankruptcy in Georgia.
Another factor to be aware of is that if you and your spouse file for joint bankruptcy in Georgia, it is possible to double the exemption figures. Essentially what happens is that both of you are able to utilize the total exemption amount allowed. But you can only claim for property that you own, or own jointly with your husband or wife.
Common Property Exemptions to Know
The most common property exemptions used in Georgia bankruptcy cover:
- Residential homesteads
- Motor vehicles
- Other personal property including health aids, furniture and jewelry
- Tools of the trade
- Money due in support
- Various public benefits
- Unpaid wages
- Pensions and retirement accounts
- Proceeds from insurance
- The Georgia Wildcard
The Georgia Homestead Exemption allows those owning homes to exempt up to $21,500 of the value of homes or other properties. A further $5,000 may be utilized as a wildcard exemption if there is an unused portion of the Georgia Homestead Exemption amount.
As an example, if you have a house that is worth $100,000 and you have a $90,000 mortgage, if you file for bankruptcy your $10,000 equity (being less than the allowable $21,500) will be 100 percent exempt and creditors will not be able to access the equity. In reality, this means you won’t lose your home, but you will need to continue to pay the mortgage.
Another factor is that you don’t need to file a homestead declaration to claim the exemption; in Georgia it is automatic.
The Georgia Motor Vehicle Exemption allows for $5,000 of the value of cars and other vehicles. If the equity in your car amounts to less than the car exemption amount, then you can keep the car (and the bankruptcy trustee cannot sell it to pay creditors.) If the equity is more, it will be a different story and the trustee will likely sell it to repay unsecured creditors.
There is also the possibility that the lender may repossess your car either during or after the bankruptcy procedure.
As with the homestead exemption, if your equity in the vehicle is more than the $5,000 exemption figure, you may be able to utilize the wildcard exemption (up to $600.)
Other Personal Property
While cars and houses normally rank in terms of the highest value property we own, there are other items that meet the Georgia exemption laws. For instance you can claim $500 worth of jewelry and $5,000 of value (worked out at up to $300 per item) of a rather weird range of items that include animals, crops, appliances, clothing, furnishings, household goods and books, and even musical instruments.
Tools of the Trade
Many people rely on specific tools of a trade to be able to work. Since it would be grossly unfair to expect them to try and earn an income after declaring bankruptcy with these tools, the exemption covers $1,500 of various tools, implements and books.
Money Due in Support
If there has been an order for alimony or child support, this money falls under the Georgia bankruptcy exemptions.
Various public benefits are also covered by the Georgia bankruptcy exemptions. These include unemployment compensation, public assistance and social security benefits, as well as veteran’s benefits, worker’s compensation, crime victims’ compensation, old age assistance, and aid to both blind persons and disabled persons.
The wage exemption applies to 75 percent of disposable earnings that have been earned but haven’t been paid. Alternatively, in the case of federal and private workers, it could be 40 times the federal or state hourly minimum wage, if this figure is greater. Bankruptcy judges are able to authorize larger amounts for low-income debtors.
Retirement and Pension Accounts
A variety of benefits and related accounts are covered by the exemptions, including IRAs and ERISA-qualified benefits, as well as public employee retirement benefits, other pensions necessary for support, and IRA payments necessary for support.
A number of insurance proceeds are exempt, including group life insurance, life insurance proceeds (as well as proceeds of a policy when the beneficiary is a dependent of the policy owner and needs the support), annuity and endowment contract benefits, disability or health benefits up to $250 a month, fraternal society benefits, the proceeds of industrial life insurance, un-matured life insurance contracts, and life insurance dividends, interest, loan value or cash value up to the value of $2,000 if the bankrupt person is the beneficiary or somebody on whom they depend.
The Georgia Wildcard
As mentioned above, the Georgia Wildcard allows up to $5,000 of any unused portion of the homestead exemption. Additionally, it allows $600 of any other form of property, bringing the total exemption allowed on “property” to $5,600. Essentially, this allows those filing for bankruptcy in Georgia to keep some property that isn’t covered elsewhere in the exemptions.
Note that there are some other less common bankruptcy exemptions that are valid in Georgia, and that the amounts quoted are updated from time to time. The Georgia Code is available at various law libraries and not on the Georgia Legislature website.