Bankruptcy is meant to give you a fresh start, not take away your home. But with home values on the rise in Georgia, many people are asking the same question. Could I lose my home if I file for bankruptcy? The answer in most cases is no. However, if you file without the right legal guidance, there is a chance you could.
If you are overwhelmed by debt and worried about keeping your home, keep reading. And if you still have questions after, contact my office. We are here to help you protect what is likely your most valuable asset.
How the Georgia Homestead Exemption Protects Your Home
In Georgia, we have what is called a homestead exemption. This exemption is designed to protect some of the equity in your home during bankruptcy. Right now, the exemption amount is $21,500 per individual or $43,000 for married couples or jointly owned property.
Your home’s equity is the value of the home minus what you still owe on the mortgage. If your equity is below the exemption limit, your home is protected. For example, if you are single and have $15,000 in equity, your home would be safe in both Chapter 7 and Chapter 13 bankruptcy because you are under the $21,500 limit.
What Happens If Your Equity Is Higher Than the Exemption Limit
Things get more complicated if your home has appreciated in value or if you have paid down your mortgage significantly. Let us say you are a single filer with $50,000 in home equity. Only $21,500 of that amount is protected. If you file Chapter 7, the bankruptcy trustee could sell your home, pay you your exempted portion, and use the rest to pay creditors.
In situations like this, Chapter 13 is usually the better option. Chapter 13 bankruptcy allows you to keep your home but requires you to pay the nonexempt equity back over time through a repayment plan. Our job is to keep that monthly payment as low as possible. Chapter 13 can also help you catch up on missed mortgage payments. If you want to keep the home, you will still need to continue making your regular mortgage payments.
A Real-World Example of How We Protect Homes
We recently worked with a single mother who had more equity in her home than the exemption allowed. She was struggling with marital debt and worried about losing her house. We were able to use Chapter 13 to create a repayment plan that lowered the amount she had to pay her creditors. This allowed her to keep making her mortgage payments and protect her home while also discharging much of her debt.
Every Case Is Different, and Timing Matters
No two bankruptcy cases are the same. The earlier we talk, the more options we have to protect your home. Bankruptcy does not mean you will automatically lose your house, but understanding how exemptions work and choosing the right chapter can make all the difference.
If you are worried about what bankruptcy could mean for your home, call my office today. We can schedule a consultation, review your situation, and build a plan that protects your future.
I’m Valerie Long, and I’m here to help you breathe easier. Do not just hope for a solution. Let us find one together.