If you owe child support or other domestic support obligations, your exempt property is subject to seizure and sale by your bankruptcy trustee. This provision is one of many in the new bankruptcy code that limits or eliminates bankruptcy protection for individuals who owe child support or alimony.
In general, exempt property is sheltered from any claim by the trustee or by creditors. For example, under Georgia law, you can shelter or “exempt” $5,000 of household goods, $3,500 of equity in a car, $10,000 of equity in a home. Other exempt property includes your IRA or 401(k), up to $5,000 of your unused real estate exemption and $1,000 in jewelry.
If you owe domestic support obligations, however, all bets are off. The Chapter 7 trustee can and will move to seize your retirement money, your clothes, your furniture, your jewelry or whatever he can find. My colleague Frank Nason advises me that Chapter 7 trustees are being encouraged by the United States trustee to go after these assets. Domestic support obligations are a “first priority” debt.
As a practical matter, most trustees will be amenable to an offer by you to “buy out” the trustee’s interest in property.
This encroachment upon the sanctity of exempt property is a new concept for the Bankruptcy Code. So, if you owe child support, alimony or any other domestic support obligation, make sure to advise your lawyer.
[tags] Georgia exemptions, domestic support obligations in bankruptcy, attorney Frank Nason [/tags]