On July 1, 2026 the Georgia Homestead Exemption increases from $21,500.00 to $50,000.00 for an individual debtor, or a double exemption of $100,000.00 if a non-filing spouse is also a co-owner. This is a dramatic increase for Georgia, and opens up Chapter 7 for many people who are facing bankruptcy and may otherwise have had to file a Chapter 13. We should see a significant increase in filings between July 1 and July 7 (foreclosure day in Georgia).
Link to What is the Georgia Homestead Exemption? What is the Georgia Homestead Exemption?
A simplistic explanation of the homestead exemption is that it determines how much equity in a residence is protected in a bankruptcy case and, in many Chapter 13 cases, the amount of your monthly trustee payments. For example, if you own a house worth $300,000.00 and the balance of your home loan (and any other liens) is $250,000.00, your equity of $50,000.00 is fully protected in Georgia and the trustee would not have an interest in the house. If you had equity of $200,000.00, and the trustee sought a sale of your house, you would get the first $50,000.00 of the net sale proceeds. The exemption is available for a property if either the debtor or a dependent of the debtor resides at the property. For example, if a debtor owns a house in which a former spouse and dependent children reside, the exemption is applicable.
Link to What is the Double Homestead Exemption? What is the Double Homestead Exemption?
The Georgia homestead exemption is doubled to $100,000.00 when the residence is co-owned by the individual filing the bankruptcy case and a spouse who is not in bankruptcy. In the second example above, if there is $200,000.00 in equity and the trustee sells the house, the debtor and spouse will receive the first $100,000.00 of the sale proceeds. This is a significant benefit for a spouse who is not in bankruptcy.
Link to Will the Bankruptcy Trustee sell my House? Will the Bankruptcy Trustee sell my House?
This is the real question, isn’t it? “Can I keep my house in Chapter 7?” is probably the most common question we are asked. The good news is that in addition to the increased homestead exemption in Georgia, in actual practice, the trustee is not interested in selling your house unless there is significant equity above your exemption. The trustee is interested in net recovery for creditors after accounting for your exemptions and the expenses of selling the house.
Let’s look at another example. Assume your house is worth $300,000.00 and you have equity of $75,000.00, leaving $25,000.00 in equity unprotected. To reach that $25,000.00, the trustee has to sell your house. The trustee’s expenses in selling the house will include a 6% real estate commission ($18,000.00) and perhaps $5,000.00 in legal and accounting fees. After those expenses, the net recovery is only $2,000.00 and very few trustees will be interested in selling a house for $2,000.00. Most trustees will want to net at least $10-15,000.00 (and often more) before selling a house. As a practical matter, this preserves an additional $25,000.00 in unexempt equity in the example. You can make the same calculations using the market value and loan balances for your house.
What is the market value of your house? Most people begin by looking at Zillow, Realtor.com or similar websites. Those estimates can be helpful starting points, but they are not always accurate. Bankruptcy trustees often retain a real estate professional to inspect the property and provide an opinion of value. If you believe you may have significant non-exempt equity, obtaining your own opinion of value before filing can be money well spent. Many real estate agents who work in your neighborhood will be willing to provide an opinion of value.
Link to What Can I Do if the Chapter 7 Trustee Wants to Sell My House? What Can I Do if the Chapter 7 Trustee Wants to Sell My House?
Let’s assume there is enough unexempt equity for the trustee to threaten to sell your house. Is there anything you can do to keep it? In many cases, yes. A trustee will often make an offer to settle for less than the net equity, after the costs of the sale. For example, if the trustee believes they can sell the house and after expenses clear $25,000.00, the trustee will likely offer to settle for a payment (or payments) of $25,000.00 or less. It is common for a trustee to offer a total settlement of $15,000.00 payable over six months.
Link to I am currently in Chapter 13 and keeping my house. Does the increased exemption affect my case? I am currently in Chapter 13 and keeping my house. Does the increased exemption affect my case?
The new exemptions could affect your case, and this will be the subject of an upcoming post. If you are in a Chapter 13 case and own a house you should contact your lawyer to discuss the new exemptions. Many people file under Chapter 13 because they have too much equity for Chapter 7. The equity in your house also might affect the amount of monthly payments to the Chapter 13 trustee. Your lawyer will thoroughly analyze your case and determine if an amendment, or even a dismissal and refile under Chapter 7, is in your best interests.
Link to Can I transfer half ownership of my house to my spouse before filing for bankruptcy to get the double exemption? Can I transfer half ownership of my house to my spouse before filing for bankruptcy to get the double exemption?
This is never a good idea unless you discuss with a lawyer well in advance of filing for bankruptcy and before transferring ownership to your spouse or anyone else. It might sound tempting to transfer property to someone else to keep it out of reach of the trustee, or to transfer a one-half interest in your residence to invoke the double exemption but this rarely works. You are required to disclose all recent transfers of property and trustees will check deed records. Depending on the circumstances and the applicable law, a trustee may be able to avoid (or reverse) transfers made years before the bankruptcy filing. Never transfer any property without first discussing with a lawyer.
Scott Riddle’s practice focuses on bankruptcy and reorganization. Scott has represented businesses and other parties in Bankruptcy cases for over 20 years. You can contact Scott at 404-815-0164 or scott@scottriddlelaw.com. For more information, click here.