When you have not been making payments on a debt, it can affect other property you own, including your home. A creditor cannot seize your home but can go to court and ask to attach a judgment lien to the property. If this happens, you may need to consider filing for bankruptcy.
A judgment lien does not give the creditor your home. Instead, the lien prevents you from profiting from selling or refinancing your home until you pay back what you owe. It is the creditor’s legal claim to the proceeds generated from the sale or refinancing of the property. If the court grants the creditor the judgment lien, the creditor may force you to sell your home if you cannot repay what you owe them. This potentially can be prevented by filing for bankruptcy.
How can filing for bankruptcy help you extinguish a lien?
Chapter 7 and Chapter 13 bankruptcy allow debtors to protect a portion of their assets through exemptions. According to the Georgia bankruptcy code, a debtor can exempt real and personal property and protect such assets from liquidation or distribution to creditors. Exempt property is safe from unsecured debt. However, you must claim the accurate bankruptcy exemption according to the laws of Georgia, unlike other states that use federal exemptions.
The bankruptcy exemption that can allow you to keep your home in Georgia is the Homestead Exemption. It prevents creditors and bankruptcy trustees from taking your home from you, but only if your home equity does not go beyond $21,500. If your home is jointly titled and you share ownership with your spouse, the number doubles. If you use the Georgia exemptions laws appropriately and your jointly titled home is worth $43,000 or less, then a creditor may not have a legal claim to your property. Therefore, they cannot force you to sell it.
Navigating through complex bankruptcy laws
Exemptions can change depending on the type of debt you owe and the rights of the creditor. The type of bankruptcy you file will also affect your case. Secured debt is often more difficult to extinguish and can pose a problem if you use your home as collateral. Learning all your options before beginning the bankruptcy process would be best. If done accurately and effectively, filing for bankruptcy can give you a fresh start and allow you to keep your home.