In most of the cases we file, our clients do not lose anything….except their debts.
First, you are not likely to lose anything because there is a good chance that your property is exempt or protected per the Georgia exemption statute. Click here to review the Georgia exemption statute.
- Even though bankruptcy is federal law, for cases filed in the State of Georgia, Georgia law controls what you can “exempt” or shelter from creditors. Examples of exempt property include your clothes, your TV, stereo, DVD player, electronics, pots and pans, most furniture and personal items. Usually there is enough room within the exemptions to protect all of your personal property.
- Cars and houses can also be “exempt.” However, your exemption is limited to a certain dollar value. Under the current Georgia exemption law, you can shelter up to $5,000 of equity in a car and up to $21,500 equity in a house. If you do not have a house, you can use $10,000 of your $21,500 house exemption for your car or any other property. For married couples, you can double your exemption. Thus, a married couple can exempt $43,000 of equity in their house and up to $10,000 of equity in their vehicles.
Second, you can use Chapter 13 to protect assets that are not exempt. Chapter 13 bankruptcy creates a payment plan. If you own assets that are not exempt, you can file Chapter 13 and we can figure out what your unsecured creditors would receive if a trustee was to liquidate your non-exempt assets. As long as we set out a Chapter 13 plan that pays back the unsecureds at least what they would get in a Chapter 7 liquidation, you will not have to give up any property. Although rare, we sometimes have to recommend Chapter 13 solely to protect a client’s non-exempt assets.
How do You Determine the Fair Market Value of Your Real and Personal Property?
You may be asked to provide proof about the value of your property. Here are some suggestions about how to value your home and your personal property:
- real estate – ask a local real estate agent to give you a written “drive by” appraisal that includes a printout of comparable home sales in the neighborhood. If your house needs repairs, have a handyman given you a written proposal and make sure that your real estate agent is aware of these needed repairs.
- cars and trucks – take your vehicles to Car Max and ask for a written valuation
- electronics and household goods – make a list of your household goods and go to eBay to look for equivalent items. Make note of the value for each item of household goods
- jewelry – take your jewelry to a jeweler or perhaps a local pawnshop or jewelry buyer who buys used watches and rings and ask for a written “quick sale appraisal.”
How to Determine if Your Property is Exempt and Therefore Protected
Unless you have unusually valuable property, there is a good chance that most of your property will be exempt. Understanding the Georgia exemption rules and how they apply to your bankruptcy case is perhaps the most confusing part of bankruptcy, especially for bankruptcy filers who try to represent themselves. Exemptions are not automatic – you have to claim them on Schedule C of your petition.
There are also special rules that apply to settlement proceeds from a car accident case or the settlement of a Georgia workers’ comp case while you are involved in a Chapter 7 or Chapter 13 bankruptcy.
Can You Still File Bankruptcy Even if Some of Your Property is Not Fully Exempt?
Yes, however you will need to make some important decisions. If you are able to file Chapter 7, you may have to surrender your non-exempt property to the trustee, who will thereafter sell it to pay claims filed by unsecured creditors. In some cases you can “buy the trustee” out by writing him a check equal to an agreed upon amount equal to the fair market value of your non-exempt equity. This presumes, of course, that you have a friend or relative who is prepared to loan you the money.
If you choose to file Chapter 13 and you own non-exempt equity, your plan must pay back unsecured creditors at least as much as they would have received had you filed Chapter 7 and had a trustee liquidate and distribute your non-exempt equity.