For must of us, our cell phone is an essential part of our daily lives. Even if we wish we spent a little less time checking them, these devices keep us in touch with others, while also providing information and entertainment. When someone is facing severe financial hardship, they might want to eliminate their nonexempt debts through a Chapter 7 bankruptcy action, but are afraid to do so out of fear that they’ll lose their cell phone or other valuable personal property in the liquidation process.
Though no specific cell phone exemption exists under Georgia law, debtors usually can keep their devices even after their Chapter 7 bankruptcy process is completed. In these cases, assets are divided into exempt and non-exempt categories. Exempt assets are protected, meaning you won’t have to forfeit them to repay creditors. Non-exempt assets, on the other hand, can be sold to pay off debts.
The general exemption frequently used to prevent the loss of a cell phone is often referred to as the wildcard exemption. According to this provision, Georgians can exempt up to $1,200 of personal property, which can be applied to your phone. If the value of your cell phone falls under this amount, you should be able to keep it without any issues. Additionally, if you have unused equity from the homestead exemption, you can apply up to an additional $5,000 to other personal assets. Your phone could also be excluded from liquidation on this basis.
In determining whether you can keep your cell phone during Chapter 7 bankruptcy, its value is crucial. Most cell phones, especially older models, are worth much less than their purchase price due to depreciation and damage. For this reason, you might not need to exhaust the entire value of the wildcard exemption even if you own a high-end smartphone. If you are still making payments on your phone through a finance agreement, you may have to decide whether to continue making those payments after filing for Chapter 7. Many phone contracts are tied to service agreements, and you’ll likely be able to keep your phone as long as you remain current on your payments. However, if you’re behind on payments, the provider could repossess the device.
At Jeff Field & Associates, we offer practical advice on to Georgians on what their life after bankruptcy will be like, including whether they’ll still be using their same phone. For a consultation at one of our offices located in Bogart, Douglasville, Gainesville, Lawrenceville, Marietta and Scottdale, please call 404-381-1278 or contact us online.