A lot of times new clients will ask me, “Will I lose everything if I file for bankruptcy?” The short answer is no. That is because in bankruptcy you will be allowed to keep certain property. In fact, oftentimes will not have to give up anything that you own. This is where bankruptcy exemptions come in.
What are bankruptcy exemptions? An exemption is a dollar amount that you are able to keep in certain categories of property, which is then applied to the equity you have in property to prevent it from being sold by a trustee or paid to your creditors. In Georgia, the legislature has enacted a statute that tells how much you can keep in each category. Below are some of the major categories, and the amounts of each exemption (as of October 5, 2021).
|Type of Exemption||Value of Exemption|
(applies to your primary residence, if owned)
(increasing up to $11,200 if you do not use your homestead exemption)
What does this mean? As an example, say you own a house that is worth $100,000, which has a mortgage (called a deed to secure debt in Georgia) of $80,000. You can apply your homestead exemption (of up to $21,500) to protect the $20,000 in equity you have.
What if you have a vehicle worth $6,000 that is paid off? You can apply $5,000 of your vehicle exemption and $1,000 of your wildcard exemption to fully protect it.
Even if you have property or a vehicle that cannot be fully protected, you have the option of filing a chapter 13 bankruptcy case where you can pay the value of the unprotected equity over the course of your three- to five-year plan.
Have more questions? Call us today at 912-275-7018 to set up a free initial consultation.
October 5, 2021