How the Georgia Motor Vehicle Exemption is Applied in a Chapter 7 Bankruptcy

Throughout Georgia, and elsewhere in the United States, one of the biggest concerns for people who are considering filing for Chapter 7 bankruptcy is whether they will be able to maintain ownership of their car or truck. Each situation is unique, but Georgia law does include substantial exemptions for vehicles and other types of assets, so you should not hesitate to explore seeking bankruptcy protection if your debt has become unmanageable. 

The Georgia Motor Vehicle Exemption enables individuals to protect a certain amount of equity in their vehicle when filing for Chapter 7 bankruptcy. As of 2024, Georgia law gives individuals the ability to exclude up to $5,000 of equity in a motor vehicle from a bankruptcy liquidation. If you and your spouse are filing jointly, you can each claim the exemption, potentially protecting $10,000 of vehicle equity.

Often discussed in the context of a home mortgage, equity is the difference between an asset’s market value and the amount owed to repay the loan(s) used to acquire that asset. For example, if your car is worth $8,000 and you still owe $3,000 on the loan, the equity in your vehicle is $5,000. If the equity in your car is less than or equal to the applicable exemption limit, you can keep your car under Georgia’s Motor Vehicle Exemption.

On the other hand, if your car’s equity is greater than the applicable exemption level in your case, the bankruptcy trustee might sell the vehicle, pay you the exemption amount, and use the remaining proceeds to pay off creditors. For these circumstances, additional relief might come through the state’s “wildcard exemption,” which allows them to Georgia filers to protect an additional $1,200 of property, along with unused portions of the homestead exemption (up to $10,000).

When you work with an experienced Georgia bankruptcy attorney, you can discuss whether your vehicle can be saved and how other exemptions can help you shield property from liquidation. You’ll want to come to the meeting with information on the market value of your car or truck, as well as documents showing what you still owe on your vehicle loan. 

At Jeff Field & Associates, we advise Georgia clients on all available exemptions and every other aspect of the Chapter 7 bankruptcy process. To schedule a consultation with a knowledgeable lawyer, please call 404-381-1278 or contact us online for a consultation. We have offices in Bogart, Douglasville, Gainesville, Lawrenceville, Marietta and Scottdale.