Georgia Bankruptcy Court rules and laws determine which real or personal property you can shelter or “exempt” when you file a Chapter 7 or Chapter 13 bankruptcy in Georgia.
Although bankruptcy law is federal, Georgia law, rather than federal law, determines what items you can keep when you file bankruptcy. The federal Bankruptcy Code permits the States to use either a federal exemption rule or to come up with its own rules. The Georgia legislature decided to “opt out” of the federal scheme – thus, in a Georgia bankruptcy court, you have no choice but to follow the Georgia bankruptcy exemption rules set out in the Official Code of Georgia, Section 44-13-100.
How to Value Real Estate for Bankruptcy Purposes
An issue that often arises in Georgia bankruptcy court – how does a bankruptcy debtor accurately calculate the value of his or her house. If you own real estate, you will be asked by your lawyer to estimate a value – and you need to be as accurate as possible. The exemption rules contained in the Georgia bankruptcy exemption law only permits you to shelter the first $21,500 of equity in your home ($43,000 of equity can be sheltered for a married couple).
At Ginsberg Law Offices, we encourage our clients to determine their home valuation based on a “quick sale” valuation – in other words, how much would you net (after commissions and closing costs and needed repairs) if you needed to sell your house in two weeks.
Written Evidence of Real Estate Values a Plus
Whenever possible, we recommend to our clients that they contact a local real estate brokerage company to request a “drive by” appraisal – it is always helpful to have a written “walk away” number if your estimate is ever questioned. There are also several on-line tools you can use to get a valuation range, including: Bank of America Tool Homegain Domainia . A newer tool that has gained a lot of press recently is called Zillow. Our experience has been that bankruptcy trustees – either in Chapter 7 or Chapter 13 – will usually accept your valuation estimate if there is some written backup.
Formal Appraisals Sometimes Needed
In rare cases, we might recommend that you obtain a formal appraisal of your property. For example, if you recently refinanced, and the appraisal purchased by the refinance lender shows a valuation higher that what your house would actually produce, you may need to get a “real world” appraisal for evidence.
Problems Arising from Inaccurate Valuation
Significant errors in real estate valuation can create problems in your bankruptcy. If you list a valuation that is too low, you run the risk of a trustee objecting to your scheduled valuation and asking the Court for permission to seize your home. In addition an obvious under-valuation will call your honesty, truthfulness and credibility into question in future dealings with your Bankruptcy Judge, your trustee and opposing counsel. If you list a valuation that is too high, you may miss out on the availability of Chapter 7 or you may pay back more than is necessary in a Chapter 13.
Summary: if you own real estate and you are considering bankruptcy, take the time to research the value of your home or any other real estate you may own. Whenever possible, obtain written documentation from a reliable source to support your estimate of valuation.