Filing bankruptcy in Georgia is similar to filing bankruptcy in most other American states, but not exactly the same. While the federal Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), also known as the New Bankruptcy Law, applies to everyone in the US, there is also state-specific legislation that only applies in Georgia. Because of this, it is essential to consult with a Georgia bankruptcy attorney to assess which type of bankruptcy you qualify for and to make the process as painless as possible.
Types of Bankruptcy in Georgia
Generally, there is a choice between Chapter 7 and Chapter 13 bankruptcy in Georgia. In most cases for those who have accumulated excessive debt, Chapter 7 is the best choice. Chapter 13 is a better option for those who are far behind on their bills and/or mortgage repayments because it allows you to keep your property. It is also the preferred, if not the only choice for those who earn too much to file a Chapter 7 bankruptcy.
While there are advantages and disadvantages of both types of bankruptcy, the most important differences relating to bankruptcy in Georgia are found in the state’s bankruptcy exemptions.
Also, irrespective of which type of bankruptcy you opt for, you will need to prove that you have been to credit counseling with an approved US trustee in the state of Georgia within six months of the time you file for bankruptcy.
You will also have to do a means test that compares your income to the median (or average) income for other Georgia households the same size as yours. Georgia median income figures depend on the size of the household. For instance if you live alone, the median income is $39,694, but if there are three of you in the house, the figure is $55,711. However there are also standard deductions that are applicable in Georgia, including transportation, housing, childcare, and food.
Exemptions in Georgia Bankruptcy Law
Georgia bankruptcy exemptions determine the way various types of property can be protected from creditors.
In general, exemption limits apply to the equity you own: the difference between what the property is worth and how much is owed. This applies to any form of property, most commonly vehicles and homes. The main issue is whether the equity is covered by a specific exemption, because if it isn’t, the trustee is likely to liquidate the asset (sell it) so that creditors can be paid. In this case, while you would usually get a cash payment equivalent to the value of your exemption, you could lose the item of property – depending, of course, on which type of bankruptcy you have opted for.
If you want to keep property that is not covered by the Georgia exemptions, you (or your attorney) will have to negotiate with the trustee and, if allowed, you will likely have to pay in the value of the property.
Georgia bankruptcy exemptions relate to:
- Real property used as a residence
- Various insurance benefits, proceeds, and dividends
- Alimony and child support
- A fairly broad range of personal property
- Public benefits
- Tools of one’s trade
There is also a wild card of $400 that may be applied to any property; as well as the unused portion of the homestead (or real property) exemption.
While there isn’t a choice between Georgia exemptions and federal exemptions as in some other states, there are a few federal exemptions that can be used in addition to the Georgia bankruptcy exemptions.
Known as the homestead exemption, real property used as a residence has an exemption of up to $43,000 in favor of the owner. A maximum of $5,000 of unused homestead exemption may be used as a wild card to protect other property.
Most types of insurance are covered including life insurance and annuity and endowment benefits. There is a maximum $2,000 exemption on life insurance that hasn’t matured if you or someone you depend on is the beneficiary. Disability and health benefits are exempt to a maximum amount of $250 a month. Life insurance proceeds from a policy that is owned by a person you depend on for support are also exempt.
Alimony and Child Support
This exemption falls under a heading Miscellaneous and relates to payments required for support.
All types of pensions are included in this exemption.
The range of personal property covered by the Georgia bankruptcy exemptions is varied and includes household goods, furnishings, appliances, clothing, musical instruments, crops, and animals. The maximum allowed on each item is $200 to a total of not more than $3,500. Jewelry owned carries an exemption up to $500; motor vehicles to $1,000; and personal injury “recoveries” up to $7,500. Additionally, health aids, lost future earnings and wrongful death recoveries needed for support, as well as burial plots, are also covered by this exemption.
A wide variety of common public benefits are listed in the Georgia exemptions, including old age assistance, social security, veterans’ benefits, crime victims’ compensation, aid to blind and disabled persons, and workers’ compensation
Tools of Trade
To ensure those filing for bankruptcy can carry on working, tools of the trade including implements and books are exempt to $500.
At least 75 percent of wages earned is allowed, and bankruptcy judges are allowed to authorize a higher amount for debtors with a low-income figure.
Federal Exemptions Allowed in Georgia
Certain retirement benefits, survivors’ benefits, and death and disability benefits may be used in conjunction with the Georgia-specific bankruptcy benefits.
Our Georgia bankruptcy attorneys specialize in both Chapter 7 and Chapter 13 bankruptcies in Georgia. We believe that everybody deserves a second chance and will help you decide which route you should take once you have decided to file for bankruptcy. We will also help you to understand how Georgia’s bankruptcy laws will affect you. Call our experienced team today. We care!