By filing bankruptcy, you are taking some chances. A good knowledge of how the laws work, especially the local laws in your state, can literally save you tens of thousands of dollars and help protect valuable assets such as your home and car. For Georgia bankruptcy filers, the exemptions allowed are less beneficial than other states. For example, in Texas, you can protect hundreds of thousands of dollars invested into a home; in Georgia, you’re lucky to get $10,000 in equity on your home.
Why are the laws like this?
First, federal laws allow for states to simply take and any statutes they make. Georgia is unique from federal bankruptcy laws, though all states have unique bankruptcy laws. The laws are guidelines, allowing for new interpretations. But why are the laws much stricter in Georgia compared to other states? Georgia has some of the highest rates of foreclosure, more bankruptcies than many other states, and has a high unemployment rate (at the high national average of about 10%). So why the laws are like this may be less important than the reality: you have to follow them. There are some ways to maximize your protections.
What can you protect on your home?
You are allowed to protect up to $10,000 in home equity in a bankruptcy. Now remember, federal bankruptcy laws still apply. Meaning you can be eligible for Chapter 13 no matter your income, you have no limit on discharging most debts with Chapter 7, and there are laws designed to protect possessions like your home and car.
Can you file Chapter 7?
You can file Chapter 7 and discharge more debt if you don’t make too much money. If you are making six figures, it’s time to consider Chapter 13. The Georgia median income is where the Chapter 7 eligibility comes from. This is a federal statute: the average income individuals have in the state. You can find eligibility laws on other blog posts on Georgia Debt Law, such as HERE.
http://www.georgiadebtlaw.com/bankruptcy-blog/2010/07/28/the-changes-from-the-new-bankruptcy-law-for-georgia-chapter-7-filers/
What is Chapter 13?
Chapter 13 is a debt repayment plan. It works like it sounds: you repay debts. It has some advantages: you are almost always eligible; you can cancel 2nd and 3rd mortgages; you can protect your home from foreclosure; you can avoid wage garnishment; and you can keep saved money. You only need some income to fund it. If you are getting a reasonable income – whether it’s from a job or unemployment, even disability –you can likely fund it.
How do you maximize exemptions?
Perhaps the best person to help you maximize all your exemptions is an experienced Georgia bankruptcy lawyer. Exemptions can be complex. You can only protect $10,000 in home equity. By filing Chapter 13, you can protect nonexempt assets much better than by filing Chapter 7. If you file Chapter 7, you can either pay for the item directly to your trustee or try to work with the creditor outside of the bankruptcy (much more difficult). Yes, it does get complex, so hiring a bankruptcy lawyer with experience in Chapter 13 is invaluable.
