Georgia, the largest state east of the Mississippi river, is famous as the nation’s foremost producer of peaches, pecans and peanuts. It was one of our original colonies, and back in 1776 its population was 40,000 —compared to today’s population of 10,310,371, making it the eighth-most populous state in the nation. The Atlanta metropolitan area is the ninth-largest in the country and the cultural and economic hub of the Southeast, containing a little over half of the state’s population.
In March 2017, the Bureau of Economic Analysis (Dept. of Commerce) reported that in 2016, Georgia had a per capita personal income (PCPI) of $41,835. This PCPI ranked 40th in the United States and was 84% of the national average of $49,571. In 2016, Georgia’s real GDP grew 3%, ranking ninth in the United States for growth and double the national average of 1.5%. Georgia’s biggest industry is finance, insurance, real estate, rental, and leasing (the group ranks as one industry by the Bureau of Economic Analysis). This industry accounted for 20.2% of Georgia’s GDP in 2016.
Despite recent economic growth, a 2017 analysis by the American Bankruptcy Institute showed that Georgia had one of the highest rates of bankruptcy filings per capita in the country in February 2017, though filings declined a bit since the same time the previous year. The average national number of filings per capita was 2.2; in Georgia it was 4.41. Only Alabama (5.42) and Tennessee (5.41) had more. Unfortunately, this year’s result is not unusual; a look at previous years at the same time shows that Georgia generally tends to rank comparatively high in number of bankruptcy filings.
So, let’s take a closer look at bankruptcy and what property is exempt from being taken to pay debts in Georgia.
Chapter 7 Bankruptcy Basics
Although each state has laws governing state exemptions in bankruptcy, bankruptcy is primarily governed by Title 11 of the U.S. Code. Chapter 7 is a liquidation bankruptcy (as opposed to a reorganization). In a Chapter 7 bankruptcy, the bankruptcy trustee can sell the debtor’s non-exempt property in order to help pay their creditors. Chapter 7 is the most common kind of bankruptcy filed by individuals.
What are the top Georgia bankruptcy exemptions?
The U.S. Bankruptcy Code provides a list of exemptions, but each state can also establish their own list of exemptions. Your exempt property is safe from the bankruptcy trustee, and that’s why determining what property is exempt is so important. In many cases, you can only exempt property in a category up to a certain value. The limits on the value apply to the equity in the property, not the value of the property as a whole.
In Georgia, unlike some other states, you cannot choose between using federal exemptions that are part of the U.S. Bankruptcy Code or the state exemptions found in Ga. Code Ann. §44-13-100. If you file bankruptcy in Georgia, you must use the Georgia exemptions. Let’s look at some that may be key to your bankruptcy.
Georgia Bankruptcy ExemptionsThe top 5 exemptions under Georgia state law.
|Type of exemption||Georgia law|
|Homestead||$21,500, or $43,000 if the title to the property is only held by one spouse; $10,000 of unused homestead exemption can be applied to any other property|
|Personal property||$10,000 in personal injury recoveries; $5,000 for household goods, clothing, tools, furnishings, animals, and crops; $500 for jewelry|
|Wages||75% of earned but unpaid weekly disposable earnings or 40 times the state or federal hourly minimum wage, whichever is higher|
|Pension/retirement||IRAs and pensions to the extent reasonably necessary for the support of the debtor and any dependent of the debtor|
Ga. Code Ann. §44-13-100(a)(1) grants an exemption of $21,500 of real or personal property that the debtor uses as a residence ($43,000 if title to the property is held only by one spouse). This also applies to a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence or a burial plot for the debtor or a dependent of the debtor. Up to $10,000 of the unused portion of the homestead exemption may be applied to any property under Ga. Code Ann. §44-13-100(a)(6).
Example: If you bought a $300,000 house in which you have $20,000 in equity, it will not be sold because your equity is under the exemption amount. However, if the equity in the property is $80,000, the trustee could sell the house to pay your debts, since the exemption of $21,500 (or $43,000 if the property is solely owned by one spouse) is quite a bit less than your equity.
Ga. Code Ann. §44-13-100(a)(5) provides a $500 exemption for jewelry.
Ga. Code Ann. §44-33-100(a)(4) provides a $5,000 exemption for animals, crops, clothing, appliances, books, furnishings, household goods, and musical instruments (up to $300 per individual item).
Ga. Code Ann. §44-13-100(a)(11)(E) gives an exemption for compensation for future earnings needed for support to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.
Ga. Code Ann. §44-13-100(a)(10) grants an exemption for health aids.
Ga. Code Ann. §44-13-100(a)(11)(D) provides an exemption for $10,000 of personal injury recoveries.
Ga. Code Ann. §44-13-100(a)(11)(B) provides an exemption for wrongful death recoveries needed for support.
Ga. Code Ann. §44-13-100(a)(3) provides a motor vehicle exemption of $5,000.
Example: If you bought a car worth $20,000 but owe the dealership $16,000, you have $4,000 equity in the car and therefore can protect it under the Georgia exemption.
Under Ga. Code Ann. §18-4-20 and §18-4-21, there is an exemption of 75% of earned but unpaid weekly disposable earnings or 40 times the state or federal hourly minimum wage, whichever is higher, for private and federal workers. A bankruptcy judge may authorize more for low-income debtors.
Benefits and Pension/Retirement
Ga. Code Ann. §44-13-100(a)(2) and (2.1) exempt various benefits and retirement accounts, including:
- Social Security benefits
- Unemployment compensation
- Veterans benefits
- Disability, illness, and unemployment benefits
- Alimony, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor
- Payment under a pension, annuity, or similar plan to the extent reasonably necessary for the support of the debtor and any dependent of the debtor
- IRAs to the extent reasonably necessary for the support of the debtor and any dependent of the debtor
- Qualifying funds or property held on behalf of the debtor under any retirement or pension plan which is maintained for public officers or employees
Georgia has a wildcard exemption that enables you to exempt $1,200 in anything you like under Ga. Code Ann. §44-13-100(a)(6). This is in addition to the $10,000 homestead exemption you may be able to use to protect other property.
Bankruptcy Court Locations in Georgia
There are three districts of bankruptcy courts in Georgia: Northern, Middle and Southern.
Atlanta: Richard B. Russell Federal Building and United States Courthouse, 75 Ted Turner Drive SW, Atlanta, GA 30303. Phone: (404) 215-1000
Gainesville: United States Courthouse, 121 Spring Street SE, Gainesville, GA 30501. Phone: (678) 450-2700
Newnan: Lewis R. Morgan Federal Building and United States Courthouse, 18 Greenville Street, Newnan, GA 30263. Phone: (678) 423-3000
Rome: United States Courthouse, 600 East First Street, Rome, GA 30161. Phone: (706) 378-4000
Macon: U.S. Bankruptcy Court, Middle District of Georgia, 433 Cherry Street, Macon, GA 31201. Phone: 478-752-3506
Columbus: U.S. Bankruptcy Court, Middle District of Georgia, 901 Front Avenue, One Arsenal Place, Columbus, GA 31902. Phone: 706-649-7837
Augusta: Augusta Courthouse, 600 James Brown Blvd., Augusta, GA 30901. Phone: 706-823-6000
Brunswick: Brunswick Courthouse, 801 Gloucester Street, Brunswick, GA 31520. Phone: 912-280-1376
Savannah: Savannah Courthouse, 125 Bull Street, Savannah, GA 31401. Phone: 912-650-4100
Before You File for Bankruptcy in Georgia
Filing for bankruptcy is a big step. If you are considering it, it would be wise to contact a Georgia bankruptcy attorney to discuss your options. If you contact an attorney soon enough, it’s possible they can help you avoid bankruptcy.