For Georgia homeowners, the risk of foreclosure can create an immense sense of anxiety. Missing a few mortgage payments may set the stage for a non-judicial foreclosure—the predominant process in Georgia—where lenders can auction the home without filing a lawsuit, provided they adhere to the relevant statutory requirements. Fortunately, the U.S. Bankruptcy Code offers potential relief for individuals seeking to retain their property. By filing for either Chapter 7 or Chapter 13, you can invoke the automatic stay and buy time to regroup, or even craft a plan to catch up on payments. Below, we explore how these two bankruptcy chapters can help Georgia residents prevent foreclosure and maintain homeownership.
Georgia is primarily a non-judicial foreclosure state, meaning most foreclosures take place outside of the court system. Lenders must follow the guidelines set forth under O.C.G.A. § 44-14-160and subsequent sections, which require notices of sale and other procedural steps before auctioning the property. Once you’ve defaulted on a mortgage, your lender will usually send a notice of default and intent to sell. If you don’t cure the arrears or negotiate alternative arrangements, the property could be sold on the courthouse steps.
Because this process can move quickly, it’s important to understand what options you have to pause or prevent the sale. That’s where bankruptcy comes in. The automatic stay, triggered under 11 U.S.C. § 362, can halt pending foreclosures, giving you breathing space to figure out a strategy for either catching up on payments or discharging certain debts.
The automatic stay is a powerful tool that kicks in the moment you file for bankruptcy in any U.S. jurisdiction, including Georgia. Once in effect, this stay orders most creditors to stop all collection activities. For homeowners on the brink of foreclosure, that means the lender must pause the foreclosure sale. Typically, the lender will need to ask the bankruptcy court for permission—known as a motion for relief from stay—to resume foreclosure actions, particularly if you don’t have a viable plan to repay the mortgage arrears or if there’s no equity for other creditors.
While the stay won’t necessarily save your home forever if you can’t fulfill payment obligations, it does offer immediate relief from collection calls and the stress of impending eviction. This time-out can be especially valuable if you’re exploring loss mitigation options or trying to secure funds to bring the mortgage current.
Chapter 7 bankruptcy allows for a discharge (forgiveness) of many unsecured debts like credit cards, medical bills, and personal loans. In Georgia, as elsewhere, filing for Chapter 7 initiates the automatic stay, which can postpone foreclosure for a few weeks or months. However, if you’re unable to catch up on your mortgage or negotiate a loan modification, the lender can eventually request to lift the stay to proceed with the foreclosure.
Still, Chapter 7 can be a strategic move for some homeowners. By eliminating unsecured debts, you may free up extra income to address mortgage arrears. Or, if you’ve decided to surrender the property, a Chapter 7 filing can grant you additional time to find alternative housing while discharging liability for the mortgage deficiency (the difference between your loan balance and the foreclosure sale price) if applicable. Exemptions under Georgia law—found in O.C.G.A. § 44-13-100—may protect some of your home’s equity, although this typically plays a bigger role in a Chapter 13 scenario for homeowners intent on keeping their property.
Chapter 13 is generally the preferred route if your primary goal is tostop foreclosure and keep your home. Under this chapter, you propose a three- to five-year repayment plan in which you systematically pay back a portion of your debts—including mortgage arrears. As long as you stay current on your monthly plan payments (and continue to make the regular mortgage payment going forward), your lender can’t resume the foreclosure process.
This repayment structure effectively allows you to spread out thepast-due mortgage amounts over the life of the plan. You also may be able to reduce or strip off certain junior liens(such as a second mortgage) if the value of your home is less than the balance of the first mortgage, though specific eligibility rules apply. The end result is a more stable path to retaining your home while addressing other debts in a manageable fashion.
Deciding whether Chapter 7 or Chapter 13 suits your situation often depends on your income, asset profile, and your objective regarding your home. Here are a few scenarios:
If you’re considering using bankruptcy to halt or delay foreclosure, consult with a Georgia bankruptcy attorney. An attorney can help you figure out which chapter you qualify for and how best to structure a repayment plan. Additionally, explore alternatives likeloan modifications or forbearance agreements, which might be viable if your financial setback is temporary. However, if time is running short and the foreclosure sale date is imminent, bankruptcy remains one of the most efficient legal mechanisms to prevent the loss of your home.
1. Title 11 of the U.S. Code (Bankruptcy Code). (n.d.). https://uscode.house.gov/browse/prelim@title11
2. 11 U.S.C. § 362 (Automatic Stay). (n.d.). https://www.govinfo.gov/content/pkg/USCODE-2021-title11/pdf/USCODE-2021-title11-chap3-subchapIV-sec362.pdf
3. O.C.G.A. § 44-14-160 (Foreclosure Procedure in Georgia). (n.d.). https://law.justia.com/codes/georgia/
4. O.C.G.A. § 44-13-100 (Georgia’s Bankruptcy Exemptions). (n.d.). https://law.justia.com/codes/georgia/
Disclaimer: This information is intended for educational purposes only and does not constitute legal advice. For advice on your specific situation, consult a qualified bankruptcy attorney in Georgia.