Atlanta, GA – If you’re considering filing for bankruptcy in Atlanta, the first thing you need to know is that there are two types of bankruptcy available. There’s the so-called liquidation bankruptcy, or Chapter 7, and the reorganization bankruptcy, or Chapter 13. The former involves selling part of your assets to pay off your debt, while the latter is a court-mandated debt repayment plan that can stretch over 3-5 years. You won’t have to sell anything when filing under Chapter 13.
Only seasoned lawyers in Atlanta can tell you for which type of bankruptcy you qualify and which would be the best option considering your financial situation. Either way, you should educate yourself about the many bankruptcy exemptions that allow you to protect part of your assets, including your house or your car.
Bankruptcy exemptions available in Georgia
People incorrectly assume that once they file for bankruptcy, they’ll lose everything they own. However, bankruptcy laws are not meant to turn people on the street and leave them penniless simply because they’d become a burden to society. Bankruptcy laws are meant to help people make a fresh start while paying off most of their debts to various creditors. Under Georgia laws, there are various exemptions available. Exempt property cannot be sold, so you get to keep those assets. To make the most of the generous provisions in the law, you should consult with experienced Atlanta bankruptcy lawyers before filing.
Georgia laws allow for a homestead exemption of up to $21,500 per individual or $43,000 if you file as a couple. What does this mean? That exempt amount goes against the equity held in the house.
Equity is the difference between the value of your home and the mortgage you still owe. Let’s say your home is worth $200,000 at current market values. If the amount you still owe on the house is around $40,000, you can file for bankruptcy together with your spouse and you can keep the house as the homestead exemption covers your equity.
If the homestead exemption does not cover your equity, the trustee will sell your house. You will receive the exemption money, the $43,000, but the rest of the proceeds will be used to pay off your debt.
Motor vehicle exemption
Lawmakers understand that a man without a car won’t be able to go work and earn their living in Georgia. This is where the motor vehicle exemption comes in. If your equity in the family car is less than $5,000 you can keep it. If you drive a fancy car, and the motor vehicle exemption does not cover the equity, you will have to sell it.
As the name suggests, you can use this exemption to protect whatever assets you want. You must use it wisely, though, so it’s best to talk things over with skilled Georgia bankruptcy lawyers.
Under Georgia laws, an individual filing for bankruptcy can use up to $10,000 in leftover homestead exemption money to increase the amount covered under another exemption. Also, you get an additional $1,200 to protect some other assets. All in all, the wildcard exemption is worth up to $11,200. If you don’t have much equity in the house, or indeed you don’t own a house, you can use $10,000 to cover another asset. For instance, you can save a pricey car you don’t want to part with.
Don’t make a hasty decision though. Consult with knowledgeable Atlanta bankruptcy lawyers and see what is really worth saving rather than what you’d prefer. This is the only way to financial recovery.
Tip: Since you’ll be dealing with lawyers and court clerks, now would be a good time to educate yourself a bit on legal matters.
Other bankruptcy exemptions
- Personal belongings – up to $5,000, but no item can be worth more than $300, or $500 for jewelry. Home health equipment is exempt, no matter the value.
- Child support and alimony – fully protected.
- Social security benefits, unemployment compensation, workers’ compensation amounts, and retirement account funds – fully protected.
- Tools of the trade – $1,500. You can keep your laptop, for instance, or other tools you need to earn a living.