January 24, 2019

How the Georgia “Wildcard” Exemption Can Save You Thousands When You File Bankruptcy

When you file either a Chapter 7 or a Chapter 13 bankruptcy, you are allowed to declare certain property as “exempt.” Exempt property does not count as an asset for bankruptcy calculations. This is why you will not have to give up household items like your clothes, kitchen utensils and furniture when you file bankruptcy.

Exemption analysis can be one of the more confusing parts about filing bankruptcy. The Bankruptcy Code says that every state has the option of creating its own list of exemptions or state legislatures can defer and use a list of exemptions set out in the Bankruptcy Code.

The Georgia legislature has chosen to “opt out” of the federal scheme and the Georgia legislature has passed a list of exemptions which can be found at the Official Code of Georgia, section 44-13-100. [Read more…]

How to Stop a Wage Garnishment in Georgia and Get Your Money Back

judgment creditorAlmost without exception my clients who are subject to wage garnishment in Georgia report that they feel “violated” or “horrified” by discovering that 25% of their take home pay 1 has been seized by a creditor.  I can certainly understand this emotion – especially if you depend on every penny of your paycheck to cover monthly expenses like rent, utilities, car payments and insurance costs.

How Wage Garnishment Happens in Georgia

With limited exceptions, you can only be wage garnished in Georgia if your creditor has first filed a lawsuit and obtained a judgment.  More than a few of my garnishment clients claim that they do not remember being sued – this is an issue for another blog post but anytime you find out that a sheriff’s deputy or process server is looking for you, it is time to take action because this means that you have been sued. [Read more…]

  1. Click here to review the details about wage garnishment in Georgia.

Unusual Asset Arises in Casey Anthony Bankruptcy Case

Casey Anthony buys back life story from trusteeBack in 2011, the nation was fixated on the trial of Casey Anthony, the Florida woman who was accused of killing her daughter.  Ms. Anthony was, of course, acquitted of murder but her problems did not end there.

Earlier this year, Ms. Anthony filed Chapter 7 bankruptcy, claiming that she owed over $800,000 to around 80 creditors and that she has no income.  Among the creditors are her defense attorney – to whom she owes $500,000, and a defamation suit of an unknown amount filed by a former babysitter 1

No doubt Ms. Anthony’s bankruptcy case will continue for months and months as she is likely to face litigation in the form of challenges to dischargeability from creditors.  However, one issue has been resolved that is somewhat unusual for a bankruptcy case. [Read more…]

  1. A Chapter 7 debtor can and should include all creditors and potential creditors even if the exact amount of the debt is unknown or not yet determined.  If the Chapter 7 discharge goes through the pending claims will be extinguished.

Sinbad Bankruptcy? News Reports Get it Wrong

According to news reportsSinbad does not file Chapter 13 coming from literally hundreds of outlets, comedian Sinbad has filed a Chapter 13 bankruptcy.  The source of this report is the web site TMZ.com – and news outlets from major news networks to gossip web sites are re-writing and re-reporting the TMZ story.

There’s only one problem with the TMZ story – it is not factually correct.  There is no way that Sinbad could qualify for Chapter 13 given the type of debts he owes.

If, as has been reported, Sinbad owes American Express $374,979 and Bank of America, $32,199, his unsecured debt exceeds the jurisdictional limits for Chapter 13.  If you consider IRS debt of more than $8 million, Sinbad far exceeds the jurisdictional limits for Chapter 13.1

I am guessing that Sinbad actually filed Chapter 7, which means that any hard assets or intellectual property he owns could be at risk.  This element of the story could be an interesting read but we may never know. [Read more…]

  1. Section 109(e) of the Bankruptcy Code provides that Chapter 13 debtors may have no more than $383,175 of unsecured debts.  Sinbad’s credit card debt alone totals more than $407,000.

Social Security Disability Lump Sum Excluded from Bankruptcy Estate?

exempt property in GeorgiaMy Bankruptcy Law Network colleague Craig Andresen has written about a very interesting federal appeals court case which holds that a lump sum payment from Social Security representing past due disability benefits are excluded from one’s bankruptcy estate by virtue of Section 407 of the Social Security Act.

Until this point I have operated under the assumption that a past due benefit lump sum had to be squeezed into an exemption to protect it for a bankruptcy debtor.  Official Code of Georgia section 44-13-100(a)(2) excludes from the bankruptcy estate “the debtor’s right to receive a Social Security benefit” or a “disability benefit.” When representing a debtor who gets approved for Social Security disability, I have been filing a motion to declare the lump sum exempt under the Georgia exemption and I have been including in my motion assertions that the debtor needs these funds for support and maintenance.

If Craig’s analysis is correct, however, the Georgia exemption argument would be superfluous. He cites an 8th Circuit Bankruptcy Appellate Panel decision called Carpenter v. Ries in which the 8th Circuit held that Section 407 of the Social Security Act excludes all Social Security funds, lump sum or otherwise, from the bankruptcy estate.

Under the logic of Carpenter, there is no need for a bankruptcy debtor to account for his Social Security lump sum at all. I can imagine a scenario where a debtor has proposed a Chapter 13 plan that pays 2 cents on the dollar to unsecured creditors, and the Chapter 13 trustee has no claim on a $50,000 lump sum Social Security payment sitting in a segregated savings account, representing past due benefits.

The Carpenter case would have a much greater impact in states like Alabama, where there does not appear to be any state law protection for Social Security benefits. Debtors there could really benefit from federal law protection of lump sum Social Security disbursements.

Georgia is part of the 11th Circuit, and 8th Circuit law is not binding on cases filed here but federal circuit court decisions do carry some influence. It will be interesting to see if a case with bad facts like the scenario described above might cause the 11th Circuit to rule differently than the 8th, possibly setting up a Supreme Court showdown.

Finally – Some Good New for Georgia Bankruptcy Filers

Georgia homestead exemptionWithin the last few weeks, there have been two favorable developments for Georgia bankruptcy filers.  First, as of May 1, 2012, the median income tables for Georgia families has been adjusted upwards, reversing a longstanding trend.  Second, on May 2, 2012, Georgia Governor Nathan Deal signed Senate Bill 117 which raised the Georgia homestead exemption from $10,000 to $21,500.  Here is why both of these developments are positive for Georgia bankruptcy filers:

Upward Adjustment of Median Income numbers – the median income tables are used in means test calculations to determine whether a bankruptcy filers is eligible for Chapter 7, and, if not, what he has to pay back to unsecured creditors in Chapter 13.  Prior to May 1, 2012, the median income for a family of 4 in Georgia was $64,223.   In cases filed on May 1, 2012 and thereafter the median income for a family of 4 is $66,250.

This means that it is now slightly easier to qualify for Chapter 7 and that the payback to unsecured creditors in Chapter 13 does not have to be quite so high. 

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How do Georgia Residents Protect Joint Tax Returns in a Joint Bankruptcy Filing?

Hraga case and income tax refund exemptionsAs 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. [Read more…]

Will You Lose Your Jewelry if You File Chapter 7?

Usually, when I meet with a prospective bankruptcy client, the first question I get is “how long will it take me to recover after filing bankruptcy” and the second question I get is “will I have to give up my personal items like furniture and jewelry?”

The “recover from bankruptcy” question is the subject of a different blog post, but I can tell you that in my experience of over 23 years, I rarely, if ever, see anybody lose any of their personal property when they file bankruptcy.

georgia bankruptcy exemption for jewerlyLet’s take jewelry, for example.  In Georgia, you can protect or “exempt” up to $500 worth of jewelry.  This means that you may have $100,000 of credit card debt and you can wipe all of that debt out and still keep your $500 worth of jewelry because under the Georgia exemption statute, this jewelry is exempt.

But wait – there’s more.  If you file jointly with your spouse, each of you gets to claim the $500 exemption, making a total of $1,000.  Further, the exemption law allows you an extra $600 of “wildcard” exemption that can be applied to jewelry, and you can take up to $5,000 of your real estate exemption and apply it to jewelry as well.

Thus, an individual can exempt $500 + $600 + $5,000 = $6,100 worth of jewelry.  A couple filing jointly can protect up to $12,200 worth of jewelry.

What if your jewelry is worth more than $6,100 (individual) or $12,200 (married couple)?  I would advise you to get that jewelry valued.  As Charleston bankruptcy lawyer Russ DeMott points out on his blog, people buying used jewelry want a deal–a really good deal.  That heirloom ring you think is worth $15,000 may fetch only $2,500 from a wholesale jewelry buyer. [Read more…]

Retirement Plans and Bankruptcy

IRA, 401(k) and pension plans and bankruptcyWhen I am meeting with clients, I get a lot of questions about retirement plans.  Often, I see clients who have very little equity in property, and even less cash, but they may have $25,000 or $30,000 in an IRA or a 401(k).   How does having several thousand dollars in a retirement plan impact your options regarding a bankruptcy filing?

To answer this question, I am going to point you to a very helpful series of articles written by my colleague Damon Duncan, a bankruptcy lawyer in Charlotte.  Although Damon is writing for the benefit of North Carolina bankruptcy filers, the principles he discusses are applicable to Georgia filings as well:

Generally, funds in an ERISA qualified retirement plan are considered “exempt” assets.  This means that your retirement plan is protected from the claims of creditors and these funds are protected from the reach of the trustee.  To put this another way, in most cases you could file a Chapter 7 and wipe out $100,000 of credit card debt, but you would exit bankruptcy with your $30,000 IRA intact. [Read more…]

Can Facebook Ruin Your Bankruptcy?

social media and bankruptcySocial Media sites, and Facebook in particular, have changed the practice of law.  Divorce lawyers regularly review the opposing party’s Facebook profile for evidence of adultery or hidden assets.   Prosecutors present online photos to juries as evidence of guilty behavior.  Bill collectors troll social media sites looking for assets and debtors.

And don’t think that limiting access to your profile to “friends” only will help.  Facebook information can easily be subpoenaed – do not assume any right to privacy for your online materials.

How has Facebook and similar sites impacted the world of consumer bankruptcy.  In this guest post, Charlotte bankruptcy lawyer Damon Duncan, identifies three situations where your careless use of Facebook could have serious bankruptcy implications: [Read more…]

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