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How to Maximize Your Georgia Exemptions

  Compared to the exemptions available in other states, Georgia has a fairly stingy schedule of available exemptions.  Some states, like Florida and Texas allow a debtor homeowner to shelter hundreds of thousands of dollars of equity in a home.  Georgia only allows you to shelter $10,000 of equity.

  There is a federal exemption statute that many states use a model for their own.  Georgia residents cannot use the federal statute.  With limited exception the federal exemption statute is more generous than the Georgia statute.  For example, Georgia allows each debtor to shelter $5,000 of household goods, whereas the federal statute allows for $9,850.  Georgia allows a $10,000 homestead exemption, whereas the federal law allows $18,450.

  The practical effect of Georgia’s stingy exemption law has been to discourage Chapter 7 filings and increase the number of Chapter 13 cases.  Historically, most states saw more Chapter 7 filings as compared to Chapter 13.  Georgia was the opposite.  Lower exemptions mean that more debtors have non-exempt property that they can only keep and protect by filing Chapter 13.

  With the passage of the 2005 BAPCPA changes to the law, the bankruptcy law itself discourages Chapter 7 and encourages Chapter 13.  Thus, the negative effect of Georgia’s stingy exemptions has been mitigated somewhat.

  The Georgia exemption law does give debtors a small break by allowing bankruptcy filers to combine some of their exemptions, and it provides for a small “wild card” exemption.  Specifically the Georgia statute provides that a debtor can use half of his unused real estate exemption and apply this exemption to any property.  The wildcard exemption provides $600 that can be used to shelter any property.

  An example may help you better understand how to combine exemptions:

Tom owns a house, but there is no equity.  He therefore does not use any of his $10,000 real estate exemption.  Tom has a paid for motor vehicle worth $9,000.  Tom can claim:

1. $3,500 - his motor vehicle exemption
2. $5,000 - 1/2 of his unused real estate exemption
3. $500 - from his wildcard exemption

Tom can therefore declare the full market value of his paid for car as exempt for bankruptcy purposes.

Example 2: what is Tom’s paid for car was worth $11,000?

1. $3,500 - motor vehicle exemption
2. $5,000 - 1/2 of unused real estate exemption
3. $600 - full wildcard exemption

Total exemption: $9,100.  This means that Tom has $1,900 of “non-exempt equity” in his car that he cannot shelter.  If Tom ends up filing Chapter 7, he will need to negotiate a deal with the trustee and pay the estate $1,900 (or some negotiated figure) to settle up with the bankruptcy estate.  If Tom files Chapter 13, his plan will need to distribute at least $1,900 to his unsecured creditors.

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