foreclosureForeclosure occurs when a homeowner defaults on his mortgage payments, resulting in a sale of the home by the bank which holds the promissory note. As the recession has taken its toll on families in recent years, foreclosure has become increasingly commonplace in Georgia and around the country. If you find yourself behind on your mortgage payment, and you want to stay in your house, you need to think about how to avoid foreclosure.

How it Works in Georgia

The foreclosure process is fairly simple in Georgia.

  • The lender must send a “demand letter” to the homeowner by certified mail. This letter informs the owner that he or she is behind on the payments (or in default), and that the lender intends to proceed with foreclosure.
  • Next, the lender must advertise the foreclosure sale for four consecutive weeks in the “newspaper of legal record” in the county in which the home is located.
  • After that, the lender may sell the property on the courthouse steps the first Tuesday of the following month, even if it’s the first day of the month. Once the property is sold, it’s very difficult to undo the sale.

How to Stop Foreclosure

There are only two viable ways to stop a foreclosure in Georgia:

  • Calling the lender and working out a deal. This is easier said than done, and I have heard numerous tales of the lender giving signs that it will postpone the foreclosure (but not putting anything in writing) and not doing so. When you are dealing with your residence, it’s best not to leave anything to chance.
  • Filing a Bankruptcy. Either a chapter 7 or a chapter 13 can be effective, depending on your goals.
    1. If you want to stay in the house and have regular income, I recommend a Chapter 13 bankruptcy. In this type of case, you pay off the arrears (missed payments) through monthly payments to a trustee. In addition, you have to begin making the regular monthly mortgage payments on time.
    2. If you just require some time to leave the property, a Chapter 7 can be helpful. In addition to wiping out your unsecured debt (credit cards, medical bills, etc.), a Chapter 7 will postpone your foreclosure for at least 2 months, in most cases.

What Happens if I Don’t Act?

The biggest negative is that you’ll eventually have to leave the house. If you allow the foreclosure sale to go through, you will face an eviction (or dispossessory) action from the new owner. How long you are allowed to stay in the residence depends on the mercy of the owner.

The good news is that if your house sells for less than what’s owed on it, you will most likely not have to pay it. Creditors pursue mortgage deficiencies very rarely in Georgia, and have to jump through a few hoops to do so. However, holders of second mortgages or home equity loans do frequently sue to collect the balance.

The upshot is that if you are not interested in staying in the home, and you only have one mortgage on the property, you may just walk away with little fear of ever hearing from the lender again.

What to do?

If you are facing foreclosure, do not wait until just before the sale date to act. Call 678.341.9114 for a free consultation as soon as you are aware of a pending foreclosure. Attorney Douglas Jacobson will examine the whole picture and steer you in the right direction, whether filing Chapter 7, Chapter 13 or just walking away is right for you.

To learn more about Chapter 13, call the Law Offices of Douglas Jacobson, LLC at 678.341.9114, for a free consultation.