Georgia Bankruptcy Law: What are the Laws regarding Bankruptcy in the State of Georgia?
Bankruptcy in Georgia
Bankruptcy is where a person or business cannot pay their debts. In such a situation, they can apply for bankruptcy whereby they can get some deal for their creditors and get a clean start by wiping off their debt.
There are two types of bankruptcy Chapter 7 and Chapter 13
Chapter 7 bankruptcy: This is a fresh start and debts like credit card balance, medical bills, and personal loans can get removed by liquidating some assets. Each state has laws that give some exemptions.
Chapter 13 bankruptcy: Here you need to have a source of income and a repayment plan is worked out to clear debts. Usually, the debts are paid over a period of three to five years time.
Georgia Bankruptcy Laws
As per laws, credit counseling is mandatory for all those who want to apply for bankruptcy. As a result of this, creditors may agree to reduce the debts. If this happens, then there would be no need to file for bankruptcy.
The next step is to file for bankruptcy before a court. The court would examine your income and expenses before taking a decision whether you qualify for Chapter 7 or Chapter 13 bankruptcy. The average income for 6 months is considered and compared with the Georgia median income. You need to work out your average household income and then compare it with the median income. For a 1 member household, the income for 12 months is $40,631, for 2 members it is $52,610. If your average household income is below this, you are eligible for Chapter 7 bankruptcy, else you need to apply the means test.
Georgia Bankruptcy Exemptions
In some states, people filing for bankruptcy have the option to choose between Federal and state laws on exemptions. In Georgia, you have to use the state exemptions only.
In Georgia, for homestead exemption, an exemption of $21,500 is allowed or $43,000, if owned by one spouse. $10,000 of unused homestead exemption can be made use for any other property.
For personal property exemptions, $5,000 is exempted for household goods, furnishing, clothing’s, crops, animals, etc. $500 exemption for jewelry is allowed and $10,000 in recoveries for personal injury is allowed.
Up to $5,000 can be claimed as an exemption for a vehicle.
75% of wages that have been earned but not paid or 40 times the minimum wage, whichever is higher can be claimed for wage exemption.
All pension/retirement funds including 401K plan, IRA, IRA Roth that is needed for the debtor’s support can be claimed for exemption.
There is also a wildcard exemption allowed in Georgia, where you can claim up to $1,200
The Georgia Bankruptcy Procedure
Once you are through with the exemptions, you can file a petition for bankruptcy in the District Bankruptcy Court in Georgia. You can take the help of a bankruptcy attorney for this. To file for a Chapter 7 bankruptcy, you need to pay $335, which you can pay in installments. For Chapter 13 bankruptcy the fee to be pad is $310. For Chapter 13, a repayment plan also needs to be submitted for the review of the court.
The court examines your petition and appoints a trustee, who will review all your paperwork in details. The trustee will call for creditors meetings. The trustee will sell non-exempt property and pay to creditors (in the case of Chapter 7). On completion of all processes, the court will issue a notice of discharge of debts.
For Chapter 13 bankruptcy, a judge will examine and confirm the repayment plan, and you need to repay debts as per the agreed plan.