Creditor Rules in Georgia

Georgia state law sets rules for creditors.

Georgia state law, as established by the Georgia Code, sets rules that pertain to creditors in the state. A creditor defines as an entity for which a debtor is obligated to pay another person an amount of money. The rules establish what actions creditors may take and how they are limited. Areas addressed include wage garnishment, bankruptcy and statute of limitations on debt collection.

Wage Garnishment Limits

In Georgia, the state sets a maximum amount that can be withheld by a creditor. The maximum is 25 percent of disposable income. This maximum amount is for all garnishments. If one creditor already has established a garnishment for 25 percent of an individual's disposable income, no other creditor can receive funds through a garnishment until the original garnishment is removed. Disposable income is defined as the amount of income remaining after typical federal and state taxes have been deducted from the individual's pay.

Wage Garnishment Exemptions

In Georgia, rules on creditors limit when they can seek wage garnishment as a means of payment on a debt. State workers' pensions are protected from garnishment, and some public benefits, including workers' compensation and aid to the blind, elderly and disabled, are protected from garnishment. Additionally, some insurance annuity benefits, disability and health benefits and group insurance benefits are exempt from wage garnishment.

Statute of Limitations

A creditor has a limited amount of time to file suit for a judgment on unpaid debt. For written contracts, such as an auto loan, the statute of limitations is six years. For credit cards, the statute of limitations is four years. If a creditor fails to sue for a judgment until the statute of limitations expires, the creditor loses the right to sue. A creditor also has only seven years to use wage garnishment to enforce a judgment.

Creditor Preference

The Georgia Code sets rules on how creditors can pursue debts for which they have obtained liens against debtors. The state law says creditors who have multiple liens against a debtor must pursue the lien for which there are no other creditors. This only applies when other creditors already have liens against one property of the debtor. State law also establishes the rights of creditors as superior to the rights of debtors.

Bankruptcy Rules

Georgia state law exempts some items from being seized by creditors after a bankruptcy. The first $10,000 of real estate equity is exempt, and the first $5,000 of household goods is exempt. The law says all household items must be valued at no more than $300 to qualify for exempt status. As much as $500 of personal jewelry also is exempt. Most retirement plans also are exempt, and debtors can exempt up to $3,500 of equity in a vehicle.

References

• Georgia Code: Chapter 18
• Georgia Department of Banking and Finance