As a debtor’s attorney, one of my goals is to help my client protect as many of their assets as possible when filing for bankruptcy. The Bankruptcy Code allows us to shelter certain assets by declaring them as exempt.
Interestingly Georgia law, not federal bankruptcy law, determines which assets you may exempt in a case filed in Georgia (there are some limited exceptions to this for filers who have recently moved to or from Georgia). The Georgia exemption statute may be found at O.C.G.A. 44-13-100.
An asset that frequently needs to be protected is one’s federal and/or state income tax refund. Because your refund comes in the form of cash, it is not surprising that bankruptcy trustees will try to find a way to grab your refund. For this reason, I advise my clients to adjust their tax withholdings so that their future tax returns will not show either an overpayment (and thus a refund) or a liability (which will create future budget problems when the tax debt comes due).
If you have a refund due you for the past year, you can use the Georgia “wildcard” exemption to declare that refund as exempt – to a point. Under the Georgia exemption statute, you can use half of your unused real estate exemption for any property + you get an additional $600 wildcard exemption. Thus, an individual can declare up to $5,600 of his income tax refunds as exempt.More on How do Georgia Residents Protect Joint Tax Returns in a Joint Bankruptcy Filing?
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A typical Chapter 7 or Chapter 13 petition requires you to submit well over 50 pages of documentation, including:
- your schedules – which includes a detailed budget, a list of all creditors including addresses and account numbers, a detailed list of assets with estimated valuations, detailed information about sales, transfers, losses and recent payments to creditors, information about your and your spouse’s income over the past 3 years
- your plan (in a Chapter 13)
- a credit counseling certificate
- pay advices documenting income for the past 6 weeks
In my experience, even the most organized bankruptcy filers will need around a week to 10 days to put all this information together. For those less organized, it can take longer.
What happens, then, if you need bankruptcy protection immediately – perhaps to stop a pending repossession, wage garnishment or foreclosure? In such an instance, the Bankruptcy Code does allow you to file an “emergency” petition consisting of only the first two pages of your petition + the credit counseling certificate.
You then have 15 days to complete the remainder of the paperwork and get it filed.More on Beware of “Emergency” or “2 Page” Bankruptcy Filings
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