What Property Can I Keep in a Bankruptcy?
How exemptions work in a Georgia Chapter 7 filingBy S.M. Oliva | Last updated on January 10, 2023
Use these links to jump to different sections:bankruptcy proceedings. Bankruptcy itself is a federal process, but individual states can establish its own set of bankruptcy laws and require its citizens to use them. Georgia is one of those states.
Unlimited vs. Limited ExemptionsSo what exactly can you keep in a Chapter 7 bankruptcy case? Some as are 100 percent exempt. This category includes most public benefits, such as Social Security, unemployment, workers’ compensation, veteran’s benefits, and any payments from pensions or court-ordered alimony or child support that is “reasonably necessary.” You can also generally keep all proceeds from life insurance and pension plans. In addition, federal law maintains a number of non-bankruptcy exemptions that protect government retirement benefits. For other categories of assets, Georgia law only provides a limited set of exemptions up to a certain dollar amount. For example, you may keep up to $5,000 of the value of any motor vehicles in your possession. If you own a car worth more than this exemption, the bankruptcy trustee has the right to sell the vehicle and give you $5,000 from the proceeds. The other critical dollar-limited exemption is for your “homestead” or primary real estate. While some states allow you an unlimited homestead exemption, Georgia only allows you to protect $21,500 of home equity. But if you are married, and you jointly own the property with your spouse, you can double the homestead exemption to $43,000. Some other limited exemptions of note include:
- Up to $5,000 in household furnishings, clothes used as wearing apparel, appliances, books, and other personal property used primarily by you and your family, provided no individual item may be worth more than $300;
- Up to $1,500 in tools or professional books used as part of your trade or business; and
- Up to $500 in jewelry.
What About My Wages?Finally, Georgia allows employed debtors to exempt up to 75 percent of “earned but unpaid” wages from their job, which in no case can be less than 40 times the federal minimum wage (or $290 per week). Note this exemption only applies to wages earned before you file for bankruptcy. After you seek Chapter 7 protection, any wages you earn going forward are not considered part of the bankruptcy estate and thus yours to keep without restriction. For more information on this area of law, see our bankruptcy overview.
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