Posted By: Scott B. Riddle, Esq. (Ph: 404-815-0164)
Note: This is the next section in the Consumer Guide to Bankruptcy in Georgia, re-typed for the Blog. Comments and questions welcome.
GUIDE TO CONSUMER BANKRUPTCY LAW IN GEORGIA
II. Chapter 7 Cases
III. Chapter 13 Cases
IV. Exemptions: What Can I keep?
One of the most important factors in deciding whether to file for Bankruptcy and, if you are going to file, under which Chapter, is what do you get to keep? The answer to this question can often be answered by looking to the exemptions allowed under the law.
Exemptions are, simply stated, what individuals are allowed to keep in a Bankruptcy case or in a collection action filed by creditors. In Georgia, these exemptions are set out in state law. Remember, in a Chapter 13 case, you may be able to retain all of your personal property, even if it is non-exempt. This is one of the advantages of Chapter 13. However, practically speaking, most consumer debtors will end up keeping all or most of their property in a Chapter 7 because it is subject to exemptions or because any non-exempt property would not be worth the time and expense involved in selling it.
1. What Property Can I Exempt?
The following is a short list of the most common exemptions allowed under the law. It is important that you disclose all property to your Bankruptcy lawyer (as required by law), so that your lawyer can provide specific advice regarding what you may exempt. The reality is that most individual debtors will be able to retain most or all of their property in a Chapter 7 or 13.
Real Property (Homestead; Residence) $10,000 ($20,000 joint case) Automobiles $3,500 in one car ($7,000) Jewelry $500 ($1,000) Furniture; Household; Clothing $5,000 ($10,000) Prescribed Health Aids No Limit Tools of the Trade $1500 ($3,000) Alimony & Support As necessary Life Insurance Proceeds As necessary Workers Compensation 100% Wrongful Death Awards As Necessary Retirement Accounts 100% for most Disability; Government Benefits 100%
In addition to the above, the law provides a wildcard exemption. This exemption is $600 plus up to $5,000 of the unused homestead exemption. For example, if a debtor has no equity in his house to exempt, he may use the $5,600 wildcard ($600 + $5,000) for any property which may be outside the other exemptions. This often comes in handy for such items as antique furniture, engagement and wedding rings, cash or bank accounts.
2. How Much Is My Property Worth?
Now that you have some idea of the exemptions allowed by law, the question turns to the value of your property. The rules are different for real property and personal property. If you own a house, the Trustee will want to know the fair market value of the house. An appraisal is the best evidence of the value of real property, followed by the qualified opinion of a real estate professional familiar with the area. Recent sales in your neighborhood are also good evidence. At a minimum, you may want to ask a real estate agent for an informal opinion. It is very important that this issue is discussed with your lawyer. Not only must your schedules be accurate, the Trustee will ask how you reached the scheduled value.
Unlike real property, personal property usually declines in value over time. For example, many people may spend thousands of dollars for clothing over time, but the fair market value of used clothing is minimal. The same may be said of household furnishings (furniture, electronics, etc.), with the exception of valuable antiques, and jewelry (with the exception of precious stones or metals).
Resources for placing a value on personal property include Edmund’s (www.edmunds.com) or used car dealers for vehicles, Ebay (www.ebay.com) for personal or collector’s items, and a local jeweler or pawn shop for jewelry or other personal items. Note that if you have collector’s items, such as coins, dolls, firearms, or similar items, it is important to discuss them with your lawyer in order to determine the value. The Trustee may consider marketing such collections through an auction or through advertisements in appropriate trade magazines.
The bottom line is the most debtors do not have personal property with a value over and above the allowed exemptions. Even if there is some non-exempt value, the Trustee will not take the property because the time and expense incurred in disposing of the items will negate any net recovery for the Estate.
3. I Have Recently Moved To Georgia. What Exemptions Apply?
If you moved to Georgia within two years of the date of filing of your Bankruptcy petition, the exemptions of the State of your prior residence will apply. The reason for this rule is to prevent people from moving to States with more liberal exemptions, such as Florida, just prior to filing. It is important that you disclose to your lawyer that you have moved to Georgia within the last two years.
Your Bankruptcy lawyer will be able to fully explain which property may be subject to exemptions, how to maximize exemptions, and the treatment of your property in a Chapter 7 or Chapter 13 case. Remember, it is very important that you disclose all property, including any legal claims you may have against others. If you do not disclose the property, the Trustee will likely object to any exemption you may have otherwise claimed.
For questions about your specific case, or to set up an appointment, please contact Scott Riddle, at 404-815-0164.