In Chapter 7 bankruptcy, there is an obligation for the individual filing to sell or liquidate some of their assets to repay their creditors. That obligation is why people also call Chapter 7 bankruptcy liquidation bankruptcy. Liquidation is a critical protection for lenders that helps the recoup some of the money owed to them and prevents people with substantial personal property from abusing bankruptcy.
Sadly, misinformation about this fast and highly effective form of bankruptcy makes many people think that the risks of filing aren’t worth the benefits of a debt discharged. People often think that they can’t keep their personal property, including their home and their vehicle.
The idea of liquidating assets makes them assume that they won’t have anything left to their name after their discharge. However, those who file have the right to protect certain assets up to a specific value as part of their bankruptcy filing.
People in Georgia filing for bankruptcy have the right to claim exemptions
Exemptions are legal rules that protect certain assets from liquidation or sale during bankruptcy proceedings. Creditors can’t make any claims regarding exempt property, but they can pursue compensation by requesting the liquidation of non-exempt possessions.
There are federal bankruptcy exemptions, as well as exemption set by individual states. Many people have the option of choosing between state and federal exemptions, but Georgia residents may only claim state exemptions when they file for bankruptcy.
What is the Georgia exemption for a motor vehicle?
Georgia does not necessarily exempt a specific vehicle for someone filing for bankruptcy. In fact, drivers may find that they cannot exempt the entire value of their vehicle. Georgia only allows people to protect $5,000 worth of vehicle value in Chapter 7 bankruptcy.
If your vehicle is worth more than that and you own it outright or have substantially paid off the financing on it, you may have to take out a loan against the vehicle and use the excess value to repay creditors. Exploring the exemptions and how to properly use them if you file bankruptcy can give you an idea of what benefits bankruptcy may offer and how much of an impact it may have on your current possessions.