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Chapter 7 Bankruptcy: What Is a “No Asset” Case?

Chapter 7 bankruptcy is a form of bankruptcy in the United States and is available to both individuals and businesses, but rarely used for businesses. A Chapter 7 bankruptcy is an asset liquidation, meaning all of the debtor’s assets are sold off to satisfy existing debts.  However,  when the laws of Bankruptcy were written, the drafters understood that an individual cannot live without certain assets to start with, such as a home, a car, or tools of a trade.  So a Debtor is allowed to exempt certain assets from the liquidation.  Exempt assets are shielded from bankruptcy and are not subject to claims by creditors. The Chapter 7 bankruptcy of a debtor who does not own any assets or whose assets are all “exempt assets”, will be considered Chapter 7 “no asset” case.

Although federal law provides for certain exempt assets in a Chapter 7 bankruptcy, individual states retain the authority to limit asset exemptions to only those allowed under state law. In Georgia, federal law asset exemptions are not allowed and only state-specific exemptions will apply. These exempt assets are summarized below, with further detail being found in Section 44-13-100(a)(6) of the Georgia Code.

What are exempt assets in Georgia?

Exempt assets can include real estate and personal property as well as support and public benefit payments. Under Georgia law, the Homestead exemption allows you to exclude $21,500 of real estate, personal property, or a co-op if it is your primary residence or that of your dependent. If a married couple is filing Chapter 7 bankruptcy, then they can double the exemption to $43,000. This means, if you own a $100,000 home as an individual with a loan of $80,000, then your $20,000 of equity in the property would be protected under the Homestead exemption.

If the Homestead exemption is not fully exhausted by your residence, you can exempt any property from the Chapter 7 bankruptcy up to the value of $1,200 plus the unused amount of the Homestead exemption, the aggregate of which is not to exceed $10,000. In the above example, after exempting the $20,000 of equity, you could use the remaining $2,700 ($1,200 plus $1,500) to exempt certain personal property.

Additionally, Georgia allows for the exemption of motor vehicles up to $5,000 as well as certain types of goods held for personal, family, or household use, up to a value of $300 each, with an aggregate value of $5,000. 

As noted, certain support and public benefit payments are excluded from Chapter 7 bankruptcies. Support payments include alimony and child support, while public benefit payments include unemployment, workers compensation, veterans’ benefits, and several other public benefit program payments. Similarly, payments such as pensions from non-profit organizations and insurance benefits are exempt from Chapter 7 bankruptcies.

Bankruptcy Lawyers Serving Augusta, Georgia

At Klosinski Overstreet, our attorneys have extensive experience representing both creditors and debtors – we work tirelessly to ensure that your interests are protected. We are experienced business and litigation lawyers with a strong accounting skillset. If you are facing debt issues and considering bankruptcy, or are a creditor to an individual or business filing bankruptcy, please contact our office today to schedule a consultation.