Failure to Claim Exemptions May Lead to Unnecessary Loss of Property

23 Jul Failure to Claim Exemptions May Lead to Unnecessary Loss of Property

Bankruptcy law is complex.  Even “simple” and straightforward Chapter 7 cases require a great deal of information along with calculations that are not at all intuitive.

Prior to the 2005 BAPCPA changes to the bankruptcy law a reasonably intelligent, careful person could find a bankruptcy “how to” book at the library and write out schedules that could be “good enough.”  In those days, the United States trustee rarely got involved in a case and even the Chapter 7 trustees were more interested in plowing through their calendars than thoroughly examining debtors.

In the Northern District of Georgia, we used to have a couple of Chapter 7 trustees who would literally take less than 60 seconds to conduct a 341 hearing.  On one occasion, I remember appearing before a trustee who simultaneously ate a sandwich, talked on the phone and conducted a 341 hearing.

In another instance, a Chapter 7 trustee (who later became a judge!) got tied up and he sent a young associate from his law firm to “sit in” for him.  The associate wore a suit that was about 3 sizes too big.

All that has changed.  The United States trustee now reviews every case.  Chapter 7 trustee have been trained to look closely at budgets and to go after any asset they can find.

In my view, debtors are taking a huge risk if they file pro se (without a lawyer).  Of course attorney’s fees in even basic cases are much higher than they were pre-BAPCPA, which leaves many honest but unfortunate debtors in something of a pickle because they cannot afford representation.

This morning, I received an email from such a debtor.  He wrote me that had filed a Chapter 7 on his own and what was the deal with these “exemptions?”  How did they apply?

I wrote him back very nicely to say that I could not give legal advice via email and that he needed to consult with a lawyer.

I fear however that this gentleman may really mess things up.  In Georgia, debtors can shelter $10,000 of equity in a home.  They can used up to $5,000 of any unused real estate exemption and apply this unused exemption to any property.  Debtors also get a $600 “wild card” exemption.  Married debtors can double these exemptions.

If a debtor does not claim his exemptions, however, his property will not be protected.  I know trustees here in the Atlanta area who will file a motion to sell a debtor’s house or car or bank account to liquidate equity that could have been claimed as exempt but was not.

Exemptions can be confusing.  I was re-reading the Georgia exemptions page on my Atlanta bankruptcy website and it occured to me that most non-bankruptcy lawyers and debtors would have no idea how the Georgia exemptions apply.  My realization led me to add a page to my site entitled “Maximizing Your Georgia Exemptions.”

So, if you are thinking about filing for bankruptcy and you are tempted to do it yourself to save money, I strongly advise you to reconsider.  Larger cities like Atlanta support many consumer bankruptcy lawyers who offer a variety of payment plans.  Personal bankruptcy is no longer an undertaking for the non-expert.

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Jonathan Ginsberg, Esq.

I represent individuals in Chapter 7 and Chapter 13 cases filed in the Northern District of Georgia, which includes Atlanta, Newnan, Gainesville and Rome. I publish several informative web sites, including and an Atlanta bankruptcy blog, Please mention Bankruptcy Law Network when you call.
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