Senate Bankruptcy Homestead Exemption Study Committee Discuss Key Issues, Possible Reform

ATLANTA (November 25, 2008) – State Senator Ed Tarver (D-Augusta) called to order the Senate Exemptions for the Purpose of Bankruptcy Study Committee’s first meeting today at the Capitol. Banking and legal representatives spoke to the committee describing their view on the current homestead exemption policy in Georgia and whether the state statue needs to be revised.

“This is an issue I have been very passionate about during my time in the Senate, and in our current financial crisis it becomes imperative more than ever we have bankruptcy laws that meet the needs of every Georgian,” said Sen. Tarver. “There has been no formal review of bankruptcy exemption in over a decade, and we have a responsibility to ensure our state provides exemptions that are adequate, not excessive, or unfairly discriminatory.”

The committee heard testimony from bankruptcy experts and scholars giving their opinion on the current policy and the effect an exemption increase would bring. Several of the testifying attorneys noted that by raising the exemption from its current rate would greatly benefit low and fixed income

homeowners, including elderly, seriously ill and disabled. They also spoke with several widowers and disabled citizens who were longtime homeowners that had file for bankruptcy due to situations like the loss of their spouse’s income and high medical bills. Their attorneys believe that an exemption increase could have qualified them for increased bankruptcy protection and provided a better opportunity to keep them in their homes.

Banking and creditor experts argued that an increase to the homestead exemption could ultimately have a negative effect to the credit industry and the economy as a whole. They stated that creditor’s concerns may rise over ability for borrower’s to repay debt under any change that could lead to tighter restrictions on credit availability and a stricter underwriting policy. They were also worried that an increase would make bankruptcy more attractive to borrowers and would encourage them to file for protection. They urged the committee that the state must make decisions to make credit more available and affordable, especially in the current budget crisis.

Committee members also heard testimony by several Chapter 7 bankruptcy trustees. They testified that a change to the current exemption would actually hurt those who are filing for Chapter 7 protection and would actually reduce the value of their homes. They strongly suggested to the committee that any proposed legislation changes not be made retroactive.

Senator John Wiles(R-Kennesaw), who co-sponsored the proposed legislation with Sen. Tarver, found today’s meeting valuable and thought-provoking. “I am very pleased that the committee was able to gather information and hear ideas from both sides of this issue,” said Sen. Wiles. “We must carefully study and consider the economic needs of all Georgians before any changes to the current provisions are made.”

Other witnesses stated that Georgia’s current statue allows for a $10,000 homestead exemption for citizens going through bankruptcy proceedings. They noted there is a wide range of exemptions throughout the nation, from Maryland having no exemption, where states like Florida offer an almost unlimited exemption. Several states like North Carolina offer increased exemptions to certain groups like widowers over 65.

The Georgia State Senate created this study committee this past session to gather information and determine whether proposed legislation changes to the current code are necessary. The committee will conclude their meeting before the 2009 Legislative Session begins in January.

Sen. Ed Tarver represents the 22nd Senate District which includes Richmond County. He may be reached at 404.656.0340 or via e-mail at
Sen. John Wiles serves as Chairman of the State and Local Governmental Operations Committee. He represents the 37th Senate District which includes a portion of Cobb County. He may be reached by phone at 404.657.0406 or by e-mail at

For Immediate Release
November 25, 2008

For Information Contact:

Raegan Weber, Director
Matt Colvin, Communications Associate