Q: What is meant by "exempt" property?
A. Exempt property can be viewed as being a amount of assets or items that a debtor is allowed to keep. Exempt property in bankruptcy is based on the traditional concept of a "homestead exemption" being a minimum items or property needed for an individual or family to exist and support itself. As allowed by the Bankruptcy Code, the State of Georgia has elected to use it own system of exemptions as the standard for exempt property in bankruptcy cases for Georgia residents. These are set forth in the Official Code of Georgia Annotated (O.C.G.A.) Section 44-12-100(a). Commonly used Georgia exemptions and exempt amounts include:
i. "Homestead" - Real or personal property used as residence to a value of $10,000 for an individual ($20,000 for a married couple); Up to $5,000 of unused portion of homestead may be applied to any other property of debtor and used as an additional "wildcard" exemption;
ii. Life Insurance Policy - Cash surrender value or accrued interest of Life Insurance Policy to a value of $2,000;
iii. Pensions/IRA's/401k's - Often stated as being unlimited in the amount that can be exempted, but there are some limits. Consult your attorney.
iv. Jewelry - Personal use jewelry to a value of not more than $500.00
v. Motor Vehicle - $3,500 in value of a car or other motor vehicle used for personal transportation;
vi. Personal Injury Recovery - Money recovered from a lawsuit for personal injuries suffered by the debtor to a value of $10,000.00;
vii. Tools of Trade - Implements, books, tools and other items used for production of income to a value of $1,500.00; and
viii. "Wildcard" Exemption - $600.00 in value in any property or properties as selected by the debtor.
NOTE: Exemptions are available only to individuals filing for bankruptcy, and cannot be used by corporate or other legal business entities.
Q: What is a "secured" debt?
A. A secured debt is a debt whose repayment is secured by a lien, claim or charge against property owned by the debtor. The lien, claim or charge may have arisen by agreement with the lender (examples: mortgage on your home, car title loan, purchase money security interest, etc.), or it may have been claimed involuntarily by the creditor pursuant to enforcement of a legal right (tax lien, mechanic's lien, judgment lien, etc.). Basically, if you do not pay, the creditor can take the property to satisfy its lien.
Q: What is an "unsecured" debt?
A. An unsecured debt is any debt whose repayment is based only on debtor's personal promise to repay. In bankruptcy, there are two primary types of unsecured debt. General unsecured debts are the most common, and usually arise from personal loans, credit cards, medical expenses, unpaid rent, claims for damages to person or property, student loans, and similar indebtedness. Priority unsecured debts are debts that are given special treatment in bankruptcy because of the nature of the debt. Typical examples of priority debts are tax debts, domestic support obligations, and some debts owed to
Q: What is a "stay" or "stay order" in Bankruptcy?
A. A "stay" is an order issued by the Bankruptcy Court basically requiring that all efforts to collect a debt or to enforce payment of debt be stopped pending the while the bankruptcy case is proceeding, or until the Bankruptcy Judge allows the collection effort to continue. On the filing of the Bankruptcy Petition, the Court will automatically issue a stay order unless the case was previously dismissed for certain causes or under certain circumstances. The stay order requires that creditors stop calling, harassing or writing you, and that most civil judicial proceedings cease.
Q: Will filing a Chapter 7 stop a foreclosure of my house?
A. Yes, if a stay order has been issued and is in effect in your case (see above). In Georgia, almost all foreclosures of residential real property are done by a non-judicial sale of the house under a power of attorney contained in the Deed to Secure Debt. The mortgage company and its attorney must stop any efforts to collect the debt, and this includes foreclosure by sale of the house under a non-judicial power of attorney contained in a Deed to Secure Debt. Georgia foreclosure sales are held on the first Tuesday of each month at the county courthouse. A Chapter 7 Bankruptcy is often timed to be filed within a few days before the date of the foreclosure sale.
Q: Can I keep my house?
A. In many situations, you may be able to keep your residence. A Chapter 7 Bankruptcy case will normally stop a foreclosure proceeding, however, it will not always allow you to keep the residence or other real property. In keeping real property, there are several factors which must be considered:
i. Is there equity in the property? If the value of the real property is more than the balance due on the secured debt plus the amount that you can claim as "exempt", then the Trustee may want to sell the property for the benefit of unsecured creditors.
ii. How far behind in your mortgage payments are you? Lenders do not really want your house or real property, and, if you are not too far behind in your payments, they might work with you to temporarily lower payments, extend the time for repayment, etc.
iii. If you are too many months behind, then the lender is likely to want to foreclose on the property, or they may file a Motion for Relief from Stay in order to get the Court's permission to foreclose on the property. The filing of a Chapter 13 Bankruptcy instead of a Chapter 7 will be a better choice if you need to pay the past due amounts back to the lender over a period of time.
iv. Can you really make the monthly payments in the future? Unfortunately, the need to file a bankruptcy case is often the result of unemployment, reduction in wages, divorce, or some other factor that has lowered your monthly income. If even after the bankruptcy discharge of many of your debts, it will still be difficult for you to make your monthly mortgage payment(s).
NOTICE: The services or benefits offered are bankruptcy relief under the provisions of the U.S. Bankruptcy Code. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
