Back to losing everything

Back to frequently asked questions page

Georgia has opted out of the federal exemption law and enacted an equivalent state law.

     It is interesting to note that the law controlling what property you will be able to exempt from bankruptcy is Georgia state law, rather than federal law.  Bankruptcy is a federal law and when you file a case, it is filed in a United States Federal Bankruptcy Court.  However, when the issue of exemptions was addressed in the law, each state was given an opportunity to use the Federal Exemption limits or opt out of them and create their own.  Georgia was one of those states that opted out of the Federal limits in favor of creating their own. 

     A few years ago, Georgia was noted as being one of the toughest states regarding what you can and cannot exempt from bankruptcy. However, last year, the Georgia legislature liberalized the exemption law - which is a benefit to people filing for bankruptcy and increased the limits on the exemptions for your property.  Although still one of the toughest, the law does provide some protection.

The Georgia exemption law may be found at the Official Code of Georgia Section 44-13-100.  You can see a copy of the statute by clicking here.

Examples of property you can exempt

The exemption law provides that certain types of property may not be seized by the trustee or creditors in a bankruptcy.  For example, if you own real estate and it has equity in it, the Georgia Exemption Statute provides that the first $10,000 of that equity is exempt.  If you are considering filing a joint case with your spouse, the real estate exemption is doubled to $20,000.

• Much of your household goods will be exempt, unless you happen to own a piece or two that has a high value. The Georgia Exemption Statute allows for $5,000 of household goods such as televisions, furniture, electronics, etc. to be exempt (double this if filing jointly).  However, the catch in this is that no one item should be worth more than $300.  Thus, a standard 27 inch television is not going to be a problem, but if you happen to own a 52” big screen tv, you may have a problem.
• Value of property is determined by looking at what would it would cost to replace the furniture that you are attempting value.   All of the trustees in bankruptcy use this as a measure of value. I tend to take a different viewpoint, I usually consider what the item would bring at a garage sale or at auction as many people would not necessarily purchase new furniture to replace the furniture they have. If you are having difficulty in  determining what some of your household goods may be worth, go to Ebay or the classified ads and see if you can find items that closely match your goods.
• A very important exemption in the Georgia Exemption Statute has to do with retirement plans. For those who are worried about this, there is good news here in that that the bankruptcy judges in Georgia have determined that 401(k) plans are exempt as are pensions.  The way to gauge this is that if the retirement plan has a penalty for early withdrawal it is probably exempt.  Over the years that I have been helping clients, there have been some who discharged $50,000 of credit card debt but were able to keep their  $100,000 401(k) account. You may think this as outrageous, but Congress has considered the arguments of the lending industry vs. the public policy of encouraging personal retirement plans.  At this point in time, you get to keep your retirement money.
• If you have a vehicle that you have title to, the Georgia Exemption law permits you to exempt $3,500 of equity in that vehicle. So if you have a vehicle that is worth say $2,000, then it would be fully protected.  On the other hand, if you have a vehicle that may be worth $10,000, then you will only be able to exempt $3,500 of that value.  You may be able to protect the remaining value of the vehicle through another category of the exemption law if available. 
• One of the categories of the Exemption law is a catch all that can be used for any property that you own and not protected by the law.  If you do not own real estate, then half of the real estate exemption  can be used for any and all other property. So that car you said was worth $10,000 and you could only protect $3,500 of it, well you now have another $5,000 available (double for joint filers).  Here is another example, let’s say you have a car worth $15,000 and you owe $7,000.  If you deduct the what is owed from the value, you would have $8,000 of equity.  Using the $3,500 exemption that is allowed and $4,500 of the catch all exemption category, you can now protect the entire value of the vehicle.
• Take a look at the statute for other categories of exemption.

An associated question that comes up is:

What if the value of your property exceeds the exemption limits?

• Now, let’s look at what happens if your property exceeds your exemptions.
• Let’s say you have a $15,000 vehicle that is paid for. You can use $3,500 of your vehicle exemption plus $5,000 of your real estate exemption (if you haven’t used it up on real estate). $8,500 of your car is exempt, but $7,500 is not.
• Chapter 7 may not work for you in this situation - the Chapter 7 trustee would seize your equity by taking title to the car, and selling it. You would get $8,500 from the sale, but the Ch. 7 trustee would keep the remaining $7,500 and distribute it to your unsecured creditors.
• In a Chapter 13, your non-exempt equity would be a factor in determining what percentage repayment you would make to your unsecured creditors.  For example, if you have $15,000 in unsecured debt and $7,500 in non-exempt equity, you would have to pay back at least $7,500 (50%) to your unsecured creditors.
• The Georgia exemption law is a key factor in determining whether bankruptcy make sense for you and, if so, whether you should file Chapter 7 and Chapter 13.

Click here for the Georgia Exemption Statute.

Back to losing everything

Back to frequently asked questions page