Updated for the Georgia law effective July 1, 2026.
One of the biggest fears people have when considering bankruptcy is losing everything, especially their home or vehicle.
Filing bankruptcy in Georgia does not automatically mean you will lose your house or car. What happens depends on the property’s equity, whether payments are current, which exemptions apply, and whether the case is filed under Chapter 7 or Chapter 13.
Worried About Your House or Car?
Call 770-683-3303 for a free, confidential consultation. Our office answers the phone during business hours, so you can speak with a real person about your property and possible next steps.
You can also review our Newnan bankruptcy services.
Georgia’s Homestead Exemption Changed on July 1, 2026
Georgia House Bill 1024, signed as Act 480, amended O.C.G.A. § 44-13-100(a)(1). For bankruptcy cases filed on or after July 1, 2026, the law increased the homestead exemption from $21,500 to $50,000 for an individual debtor and from $43,000 to $100,000 for a qualifying primary residence shared by spouses.
The exemption protects equity, not the home’s full market value. A basic equity estimate starts with the home’s current value and subtracts mortgages and other valid liens. Title, filing status, ownership interests, and other facts can affect the calculation.
Beginning July 1, 2031, the statute calls for annual inflation adjustments. The 2026 change did not increase Georgia’s separate motor-vehicle exemption.
- Read Georgia HB 1024 as signed
- Read the U.S. Bankruptcy Court’s Georgia homestead-exemption announcement
What Happens to Your House in Chapter 7?
Chapter 7 uses exemptions to determine what equity is protected from liquidation. If the home’s equity is fully protected and mortgage payments remain current, many filers can keep the home. The exemption does not erase the mortgage or prevent the lender from enforcing a valid lien if payments are not made.
If equity exceeds the available exemption, a Chapter 7 trustee may evaluate whether a sale would produce a meaningful return for creditors after liens, exemptions, and sale costs. Equity over the exemption does not automatically guarantee a sale, but it requires careful review before filing.
What Happens to Your House in Chapter 13?
Chapter 13 generally lets a debtor keep property while making payments under a court-approved plan. It can provide a way to catch up on overdue mortgage payments over a three- to five-year plan while regular post-filing payments continue.
The higher homestead exemption also matters in Chapter 13. Under the “best interests of creditors” test, unsecured creditors generally must receive at least as much through the plan as they would have received in a Chapter 7 liquidation. More protected equity can reduce the nonexempt amount that must be accounted for in the plan.
| House issue | Chapter 7 | Chapter 13 |
|---|---|---|
| Automatic stay | Usually pauses foreclosure temporarily while the stay remains in effect | Usually pauses foreclosure while the stay remains in effect and the case proceeds |
| Catch up overdue mortgage payments | No repayment-plan mechanism | Often possible through a three- to five-year plan |
| Effect of nonexempt equity | May create sale risk if a sale would benefit creditors | May increase the amount unsecured creditors must receive under the plan |
| Ongoing mortgage payments | Must still be addressed | Must still be maintained as required |
What Happens to Your Car?
Georgia’s motor-vehicle exemption remains $5,000 in total equity in all motor vehicles per debtor under O.C.G.A. § 44-13-100(a)(3). This is an equity limit, not a limit on the vehicle’s purchase price or market value.
For example, a vehicle worth $18,000 with a $15,000 loan has about $3,000 in equity before considering other issues. A debtor may also have a $1,200 wildcard exemption plus up to $10,000 of unused homestead exemption available for other property, but using the wildcard for a vehicle can affect how other assets are protected.
Cars in Chapter 7
- If all vehicle equity is properly exempted, the Chapter 7 trustee generally will not liquidate the vehicle for unsecured creditors.
- If the vehicle is financed, the lender’s lien remains. Depending on the facts, options may include reaffirming the debt, redeeming the vehicle, or surrendering it.
- Equity above the available exemptions can create risk and should be reviewed before filing.
Cars in Chapter 13
- Chapter 13 may allow a debtor to catch up on missed car payments or address the secured debt through the plan.
- A “cramdown” may reduce the secured claim to the vehicle’s value in some cases, but purchase timing and other Bankruptcy Code requirements matter. It is not available for every vehicle loan.
- Nonexempt vehicle equity may affect how much unsecured creditors must receive under the plan.
Keeping or Surrendering Property
| Situation | Issue to review |
|---|---|
| Home equity is within the exemption and payments are current | Chapter 7 or Chapter 13 may allow the home to be retained, depending on the full case |
| Mortgage is behind and the debtor wants to keep the home | Chapter 13 may provide time to cure arrears while current payments continue |
| Car loan exceeds the car’s value | Chapter 13 treatment may help, subject to purchase timing and plan requirements |
| Payments are no longer affordable | Surrender may address personal liability, but timing and any remaining secured claim should be reviewed |
| Property has substantial nonexempt equity | Chapter 7 liquidation risk and the Chapter 13 creditor-payment floor must be calculated before filing |
Get a Case-Specific Equity Review
The new $50,000 and $100,000 homestead limits can materially change the analysis for Georgia homeowners, but exemptions are only one part of the decision. Deeds, liens, property values, payment history, other assets, prior filings, and plan feasibility all matter.
H. Brooks Cotten at Newnan Bankruptcy can review your mortgage, vehicle loan, equity, and filing options. Call 770-683-3303 during business hours to speak with our office, or request a free, confidential consultation online.
This article provides general educational information and is not legal advice. Bankruptcy outcomes depend on the facts of each case and the law in effect on the filing date.
