How Georgia’s New Homestead Exemption Affects Bankruptcy Strategy

Georgia homeowners considering bankruptcy relief have an important new advantage. A major increase in the state’s homestead exemption should allow more people to keep their homes in Chapter 7 bankruptcy while also improving the outcome for many Chapter 13 filers.

A state law that took effect July 1, 2026 more than doubled Georgia’s homestead exemption, which protects a certain amount of equity in the primary residence of a debtor filing for bankruptcy. The exemption amount has increased to $50,000 (from $21,500) for an individual and to $100,000 (from $43,000) for a married couple filing jointly.

The increase in the homestead exemption may affect a debtor’s choice between Chapter 7 and Chapter 13. Under the old law, homeowners might choose Chapter 13 largely because they had too much equity to protect in a Chapter 7 and so risked losing their home. With the new exemption amounts, that calculation may be very different. 

In Chapter 7, the bankruptcy trustee has the right to sell any property with nonexempt equity in it, and then to use the proceeds to pay the debtor’s creditors. Consider, for example, the owner of a home with a fair market value of $260,000 and a mortgage balance of $220,000, leaving $40,000 in equity. Under the prior exemption, only $21,500 of the equity would have been protected, forcing a sale of the home. Under the new exemption, all $40,000 is covered, provided there are no other liens against the house.

In Chapter 13, a debt repayment plan must generally give creditors the same amount they would have received from a debtor’s liquidated assets in a Chapter 7. When more home equity is exempt, there may be less money available for creditors than if the house were to be liquidated. With the new exemption, many Chapter 13 filers should see lower monthly payments. In addition, the greater equity protection gives the debtor more latitude to prioritize mortgage arrears, car payments, or priority debts. This can result in a shorter repayment plan (26 months vs. 60 months).

Bankruptcy is never a one-size-fits-all proposition. The best strategy for you depends on the value of your assets and the nature and amount of your debts. If you are a homeowner, however, Georgia’s expanded homestead exemption gives you substantially greater protection than you had before. Before deciding on Chapter 7 or Chapter 13, it is wise to have a professional evaluation as to how the new exemption might affect you in either case. 

At Jeff Field & Associates, with offices in Douglasville, Gainesville, Bogart, Lawrenceville, Marietta and Decatur, we show Georgia consumers how to best maximize their bankruptcy options and guide them through the process. Call 404-381-1278 for a free initial consultation or contact us online.