How does a bankruptcy filing affect home ownership in Georgia?
Many Atlanta residents who are in need of serious debt relief may be avoiding filing for bankruptcy protection because they are worried that this will cause them to lose their homes. However, bankruptcy is actually a viable option for many homeowners, as in many cases it allows people to keep their homes and become freed from a number of their debts.
The relationship between bankruptcy and homeownership, however, is very complicated. It is important that people discuss their debt relief needs with a bankruptcy attorney and ensure that they understand all of the potential consequences to home ownership before filing.
When a person files a bankruptcy petition in Georgia, a hold is automatically placed on his or her debts. This is called a stay, and it means that creditors and mortgage lenders cannot take any legal action – including foreclosure – against the petitioner. In fact, creditors, collectors and lenders cannot even contact petitioners by phone or letter during the stay period.
As a result of the stay, depending on the specifics of a case, bankruptcy attorneys are often able to help homeowners avoid foreclosure.
In addition to the automatic stay, Georgia has a homestead exemption law that generally protects bankruptcy filers from losing their homes, cars and other personal assets.
When a person files for bankruptcy, a trustee evaluates the filer’s assets and may decide to sell some of them to pay off creditors. Assets that are protected by a homestead exemption cannot be sold off.
So, the common belief that a bankruptcy filing will cause a person to lose his or her home and all other property is a myth. However, the homestead exemption is very complicated, and people should always seek legal counsel before pursuing bankruptcy.
Source: Fox Business, “How Safe is My Home in Chapter 7 Bankruptcy?” Aug. 21, 2013