People who are contemplating filing for bankruptcy may have questions regarding being able to keep their homes.
Fortunately, the homestead exemption exists to allow those going through bankruptcy to retain their primary residence in most cases.
What is the homestead exemption?
According to FindLaw experts, the homestead exemption exists to prevent complete homelessness and loss of equity in a home. The homestead exemption allows the homeowner to avoid foreclosure in some cases, retain some of the value of the home and avoid becoming homeless. Providing that the homeowner continues to pay his or her mortgage, there will be no need to vacate the premises.
While some states do not allow mobile homes or condominiums to qualify under the homestead exemption, Georgia law states that any property serving as a residence is eligible. Land without a dwelling on it, however, does not qualify.
What happens to mortgage payments following a bankruptcy?
The United States Bankruptcy Court website for Northern Georgia states that a creditor will still maintain a lien or security interest in any real property, despite a discharge. So, while a discharge may relieve homeowners of personal liability, the homeowners must still pay the mortgage to remain in the home.
Homestead exemptions primarily apply to Chapter 7 bankruptcies. A Chapter 13 bankruptcy allows for a restructuring of debt instead of a discharge. For this reason, mortgage payments do not change during Chapter 13 bankruptcy. If a homeowner is behind on his or her payments, the court may allocate the delinquent amount to the repayment plan. It is important for potential filers to speak with a qualified legal representative to determine which type of bankruptcy is best for their situation.