Can you file for bankruptcy in Georgia and keep your car? One of the primary concerns for those considering filing for bankruptcy is the effect the process will have on their assets. After all, what good is it to shed burdensome debt if you’re left with no car to get to work?  Georgia bankruptcy laws do contain an exemption for automobiles. Under the Georgia automobile exemption, debtors can protect up to $3,500 of equity in all of their motor vehicles. Equity is determined by subtracting the current amount of your loan from the appraised value of your car. For example, let’s say that Joe from Atlanta owns a 2000 Honda Accord worth $8,000. Joe’s car loan has an outstanding balance of $7,000. In this example, Joe has $1,000 of equity in his car and would be permitted to keep the Honda under Georgia bankruptcy laws as long as he could afford to make payments.

A few points to be aware of:

1. It is important to understand that exempting equity in your vehicle does not relieve the obligation to make your car payments after bankruptcy. Even if you have properly claimed an exemption in the car, it will still be subject to repossession if you fall behind on payments.

2. A small amount of non-exempt value in your car will not doom it to forced sale by the trustee. In the event your car has slightly more equity than allowed by Georgia bankruptcy laws, it is doubtful that the trustee will be interested in selling it to get at $500 or $600. The cost of putting the car on the market would likely negate the amount of any dividend payable to creditors. Even if you have quite a bit of equity in the car (maybe you paid cash and have no loan), it is always possible to make the trustee a cash offer and buyout the non-exempt value in the car thereby preventing a sale.

3. If your car is sold, you will be entitled to a check for the amount of the Georgia car exemption. How does this work? Let’s say you own a car with $6,000 of equity and are not in a position to pay the trustee $2,500 (the non-exempt equity in your car). In this scenario the trustee would sell the car, however, you would be entitled to a check for $3,500 (the exemption limit for cars under Georgia bankruptcy law).

If you are considering filing for bankruptcy, contact an attorney.

See Also:

What Is the Rule With Cars and Bankruptcy?

Georgia Bankruptcy: Keeping Your Home

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