Homestead Exemptions and New Georgia Residents

My colleague, Massachusetts bankruptcy attorney Bill McLeod, published an interesting post about homestead exemption caps and pre-bankruptcy filing transfers of property in his McLeod Law Offices blog.  Bill’s post reminded me that if a debtor acquires an interest in real property within 1215 days of filing for bankruptcy, the debtor can only exempt $125,000 of equity in property.

In Georgia, this 1215 day issue rarely arises since Georgia’s homestead exemption is limited to $10,000.  In Massachusetts, by contrast, the a debtor may claim up to $500,000 in equity.

In case you were wondering, that last sentence is not a misprint.  Georgia debtors can shelter $10,000 of equity in real estate while Massachusetts debtors may shelter $500,000.

However, the Georgia exemption law does not apply if the debtor moved to Georgia less than two years prior to filing.

So, a Massachusetts resident (or a resident from any State with a more generous exemption law than Georgia) can move here, buy a house, and protect more equity in bankruptcy than a lifelong Georgia resident if the newly arrived resident files bankruptcy within two years of moving.

It sure seems that forum shopping may be alive and well under current bankruptcy law, especially if you have plans to move to Georgia.

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