One of the biggest fears people have about Chapter 7 bankruptcy is losing everything they own. The word “liquidation” makes it sound as if a trustee will take the house, the car, and the savings account. In reality, most people who file Chapter 7 in Georgia keep all or nearly all of their property. The reason is exemptions, legal protections that shield certain assets from creditors.
How Chapter 7 Works
When you file Chapter 7, a trustee is appointed to review your assets. Property that isn’t protected by exemptions can be sold, and the proceeds are used to repay creditors. Most consumer cases, however, are “no-asset” cases, meaning the filer has nothing the trustee can sell after exemptions are applied.
At the end of the case, which usually takes about four months, most unsecured debts are discharged.
Georgia Uses Its Own Exemptions
Georgia requires residents to use the state’s exemption system rather than the federal list. Knowing how these exemptions apply to your property is essential before filing.
Homestead Exemption
Georgia protects a set amount of equity in your primary residence, with a higher amount available in certain situations involving married couples. If your equity falls within the exemption, you can generally keep the home in Chapter 7 as long as you stay current on the mortgage.
Motor Vehicle Exemption
A limited amount of equity in a vehicle is protected. If your car is financed and you owe close to its value, it’s often fully protected.
Wildcard Exemption
Georgia offers a wildcard exemption that can protect any property of your choosing, such as cash, bank accounts, or tax refunds. Unused portions of the homestead exemption may add to the wildcard in some cases.
Household Goods and Personal Items
Furniture, appliances, clothing, books, and similar items are protected up to set limits, with a cap on the value of any single item.
Tools of the Trade
Tools, equipment, and books used in your job or business are protected up to a set amount.
Retirement Accounts
Most qualified retirement accounts, including 401(k) plans and IRAs, are protected.
Public Benefits
Social Security, unemployment benefits, veterans’ benefits, and certain disability payments are generally protected.
What Happens to Secured Property
If your home or car has a loan, Chapter 7 doesn’t eliminate the lender’s lien. You can usually keep the property by staying current on payments and, for some loans, signing a reaffirmation agreement. If you prefer to walk away, you can surrender the property, and any remaining balance is discharged.
Property That Could Be at Risk
Some assets may not be fully protected, such as:
- Significant home equity above the exemption amount
- Second homes or investment properties
- Valuable collections or luxury items
- Large cash savings or non-retirement investments
- Vehicles with substantial equity
When assets exceed exemptions, Chapter 13 may allow you to keep them by paying their value to creditors over time.
Timing and Transparency
The trustee reviews financial activity before filing. Transferring property to relatives, paying back family members, or selling assets shortly before filing can create problems. Always discuss these transactions with your attorney before filing.
Planning Before You File
- List all assets and estimate their current value
- Gather loan statements for your home and vehicles
- Note any expected tax refunds or inheritances
- Avoid moving money or property without advice
- Keep records of retirement account balances
Starting Over With Confidence
Chapter 7 can provide a clean slate from unsecured debt in Marietta while allowing you to keep the property you rely on. A Marietta Chapter 7 bankruptcy attorney can review your assets, apply Georgia exemptions correctly, and explain exactly what you’ll keep before you file.
Questions to Ask Before Filing
- Is all of my home and vehicle equity protected?
- How should I use the wildcard exemption?
- Will my tax refund be protected?
- Is Chapter 7 or Chapter 13 better for my assets?
