Can a Mortgage Company Collect a Deficiency Balance Against Me After Foreclosure in Georgia?

A mortgage company in Atlanta, Georgia can collect a deficiency balance against the homeowner after foreclosure, but must go through court to do so. In Georgia, the mortgage company usually buys back your property at the foreclosure sale for the amount you owe on the house and then lists it for sale on the open real estate market. Typically, a mortgage company cannot sell the house for enough money to recover the amount that you owe it. Thus, what is called a deficiency balance is left against you. Homeowners often fear that the mortgage company will seek to collect the difference. In Georgia, a mortgage company can seek to collect the deficiency balance after a foreclosure sale, but only if they file a notice within 30 days with the court confirming the sale. Confirmation of the foreclosure sale with the court must show that the bank paid fair market value for the property at foreclosure and is a prerequisite to obtaining a deficiency judgment. Further, for homeowners who have a second mortgage, the second mortgage company will likely seek to collect the amount a homeowner owes them after foreclosure.

Bankruptcy, including Chapter 7 and Chapter 13, eliminates the bank’s right to collect deficiency balances after foreclosure sales in Georgia. By filing bankruptcy, you will:

  • Wipe out the entire balance of the first mortgage, including the deficiency balance
  • Wipe out the entire balance of the second mortgage, even after foreclosure
  • Not be required to make any payments whatsoever on any mortgages

If you have questions about your liability after a foreclosure in Georgia, call the Law Offices of Charles Clapp at (404) 585-0040 for a free consultation.


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