A big concern of a lot of people going through bankruptcy is whether they are going to lose all of their property. It is a valid concern but generally not one you need to worry much about. All states have laws that protect certain property from creditors. A common example most people are aware of is the homestead exemption that protects a certain amount of equity in your home. The bankruptcy code even has its own set of federal exemptions to protect certain property.
Many states have opted out of the federal exemptions, preferring to craft their own exemptions to protect property. In Georgia, we have opted out of the federal exemptions and in many instances the Georgia state exemptions are more generous than the federal ones, meaning that you can protect more of your property through the bankruptcy process.
Below are some examples of protected property under Georgia law:
In Georgia during bankruptcy you are entitled to an exemption of up to $43,000 in equity in your home for a married couple. A single filer is entitled to up to $21,500. While this is great to have, it is not uncommon to have little to no equity these days.
Exemption for Your Car
Each individual in Georgia is entitled to an exemption of up to $5,000 in equity in one car. If you are married you can double up your exemptions and protect up to $10,000 in equity on one car (if it is jointly owned) or you can divide them and each protect up to $5,000 on two cars.
Each person has an exemption for jewelry for up to $500. Although it is possible for a trustee to take more valuable jewelry (such as a diamond engagement ring), it is not likely unless it is worth a significant amount.
Retirement Account Exemption
Retirement accounts such as 401(k) accounts and IRA accounts are exempt under both Georgia state law and federal law. Social Security is also exempt, meaning that your creditors cannot take this from you. The only caveat here is that you can’t dump a bunch of money into a retirement account just before you file for bankruptcy just to protect it.
Exemption for Household Goods
Items such as furniture, appliances, and general household items are exempt in Georgia in the amount of $5,000 for each individual or $10,000 for a couple. I haven’t seen this really ever be an issue in bankruptcy. Not much resale value on the old couch, no matter what you paid for it.
The above are just a handful of the bankruptcy exemptions here in Georgia. The law provides protection for most personal property, and truthfully the statistics I have read show that 94% of Chapter 7 bankruptcy filers in Georgia do not lose any property in the bankruptcy process.
I offer a free bankruptcy consultation where we can review your property and help you determine if you have any assets that would be at risk during bankruptcy and what we can do to protect them.