A huge misconception about bankruptcy seems to be the concept that you will lose all of your property if you file Bankruptcy.  The fact of the matter is that the LAW allows you to keep certain property, even if you file a Chapter 7 Bankruptcy case (Liquidation). The Bankruptcy code allows for Exemptions. Exemptions allow you to keep certain property and protect it from being a part of your Bankruptcy Estate.

In GA, the Exemptions are listed in O.C.G.A 44-13-100. When you file a Chapter 7 Bankruptcy case, the Chapter 7 Trustee’s job is to collect from the Estate all moneys, assets, ect.. and sell those assets to pay your unsecured creditors as much as possible after satisfying any liens on the property. The Estate is created when you file a case and encompasses all of your assets.  Note: The Trustee will do a check on your assets, so it’s important to list all of your assets first then Exempt them in your case.  

The best way to explain this is to imagine there is a giant box in your front yard and everything you own, clothing, rings, furniture, cars, houses, 401K, IRA, (EVERYTHING YOU OWN OR HAVE A MONEY INTEREST IN).. is placed in that box. The Trustee will sell everything in the box if it will result in money for the Estate.  Now the Law (O.C.G.A. 44-13-100) allows you to take items out of the box and protect it from being taken from you (Exemptions). Most people can exempt most, if not all of their household items, most people can take out all of their clothing, unless you have expensive furs, etc.. In Ga, you can Exempt $3,500.00 in equity in any one car and 10K per debtor in home equity.  So, let’s say you have a house worth 150k and you owe 140K on the mortgage(s). If the Trustee takes the house out of the box, he/she must satisfy all liens against the house before selling it.   The house is worth 150K,  minus the 140K mortgage, leaves 10K in the box. As I mentioned above, you can exempt (or take out of the box) 10K which would leave a value of Zero in the box. The Trustee in this case, would not take an interest in selling the house.  NOTE: As I mentioned above, it’s important to list all of your property in your case. If you fail to list property, it can’t be Exempted  (taken out of the box) later.

There are certainly other Exemptions such as Exemptions for 401K, IRA, Pensions and others, but you MUST list all of your property first in order to take it out of the box by way of the allowed Exemptions.

If you have any questions about what you can keep if you need to file a Chapter 7 Bankruptcy Case, please feel free to contact me at 404-378-0600.

Ken Parker