Anyone can experience financial hardship, and the chances are high that you’ve experienced some sort of financial crisis at least once in your life. Financial hardship leaves us in a difficult place of seeking an immediate solution to the problem, and amongst the array of options, some assets you own play an integral role in determining which option is the most suitable for us.
The main purpose of writing this article is to explain a debt solution method called bankruptcy and how to get it—as described in the Georgia Code. If you have assets that won’t allow you to get exemptions, I will discuss some alternatives that can also help. Georgia is a unique state in that Georgia’s wildcard exemption may save you thousands of dollars.
For example, you may qualify to get a Chapter 7 bankruptcy discharge, but the value of your equity may mean that the better option is to file for a Chapter 13 bankruptcy in Georgia or opt for debt settlement. Fortunately, as you’ll notice in later sections below, a bankruptcy trustee will hardly pursue equity in your home except in situations where a debtor recently relocates to Georgia, and the exemption of the former state applies.
Some things you should know about Georgia Bankruptcy Exemptions
- There are two types of bankruptcy exemptions; they are state and federal bankruptcy exemptions. Most states in the U.S allow debtors to choose between federal and state exemption, but in Georgia, a debtor can only use the state exemptions.
- Before you use Georgia bankruptcy exemptions, you should have been a resident of the state for a minimum of 730 days before filing for a bankruptcy discharge. If you live in Georgia but haven’t resided there for that period of time, then you should read John R. Bates excellent guide to exemption option for non-resident debtors
Before you file for bankruptcy as a resident of Georgia, you must be aware of some statutes and bankruptcy exemptions. One such exemption stipulates that assets that are above Georgia’s exemption law should be liquidated by the bankruptcy trustee. Let’s delve into more intrinsic details.
Georgia Bankruptcy Exemption List
- Homestead Exemption: $21,500
- Automobile Exemption: $5,000
- Personal Property Exemption: $5,000 (no item worth more than $300)
- Jewelry: $500
- Tools of the trade: $1,500
- Cash value insurance policy: $2,000
- Property Value: $1,200 (You can also get up to $10,000 of unused real estate exemption, which is known as the “wild card provision although you will want to speak with a bankruptcy attorney about this element)
- 401(k) Plan: Exempt
- IRA: Exempt
- Pension: Exempt
- Social Security Benefits: Exempt
- Disability income and Benefits: Exempt
You are above to double the exemption amounts if you are married and filing jointly. This article’s information was last checked as of 2018, so you should consider speaking with a local bankruptcy attorney if you’d like more information or want to know whether something has changed or something has been added or missing from this list..
We won’t discuss on some less common exemptions such as firefighter pensions, illness benefits and some retirements that involve stocks; however, you can read more extensively on those topics and Georgia bankruptcy exemptions by going to the Georgia Government Code.
Options You Have When Above Georgia Bankruptcy Exemptions
You have options at your disposal when considering which options you should choose. If a Chapter 7 bankruptcy in Georgia is not the best option for you, you may want to review other options such as Chapter 13 bankruptcy, debt settlement, and debt management.
Chapter 13 Bankruptcy:
This type of bankruptcy is termed “Wage-earners bankruptcy”—this is because you’d be asked to schedule monthly debt payment based on your financial capacity, the payment period is within 3 to 5 years. Chapter 13 bankruptcy is a more expensive option, but more valid for those who have properties that are above Chapter 7 bankruptcy exemptions.
In this type of debt relief, the debtor or a debt settlement company will request and negotiate that the creditor lowers the amount owed by the debtor because the debt payment causes you challenges in meeting your compulsory financial obligations. For example, if you owe $10,000, the debt settlement company may try to negotiate a $5,000 payment. Although this option still has a negative effect on your credit score, it may be the best option for those who don’t want to go through the bankruptcy route.
In this method, a debt management company will negotiate with your creditor to reduce the interest rate on your loan (s) due to financial difficulty. For example, if your credit card interest rate is 22%, a debt management company will beat it down to 8%. This option is highly effective for credit cards but can be very expensive.