No, you will not lose everything if you file for bankruptcy. This is a common concern for many. They have heard they will need to liquidate assets to pay creditors before their debt will be waived, and they do not want to lose everything they own.
The first thing to note is that liquidation generally happens with a Chapter 7 bankruptcy filing. Other types, such as Chapter 13, may not even require assets to be sold. Instead, debt is consolidated into a repayment plan. On top of that, even with a Chapter 7 filing, there are many property exemptions under Georgia law. Only non-exempt property has to be liquidated.
What are some examples of these exemptions?
Bankruptcy exemptions can be used to shield certain assets from creditors, despite the debtor’s position. They include:
- There is a homestead exemption. For an individual, they can exempt $50,000 of equity in their house. For a couple, this is increased to $100,000.
- There is also a wage exemption. Often, people are allowed to retain 75% of their earnings.
- Important property is also often protected. The tools of the trade exemption allows someone to exempt $1,500 worth of tools they need in their occupation, while the motor vehicle exemption allows for $5,000 of equity held in a motor vehicle that they own.
There are also personal property exemptions, wildcard exemptions, and exemptions for public benefits, pensions and retirement plans. These are just a few examples, but they help show how you can often keep the property that you own.
Navigating the legal process
The key to a successful bankruptcy filing is to understand exactly how the law works, what exemptions you can use and how to file. An experienced attorney can help at this time.