January 20, 2020

A Review of Mortgage Foreclosure Laws in Georgia – How a Bankruptcy Filing Stops Foreclosure

The threat of a mortgage foreclosure serves as a prime motivating factor for many Chapter 13 bankruptcy filings.  As an attorney who practices in this area, I sometimes forget that frightened, stressed out homeowners who are actually facing foreclosure may not realize exactly how or why a Chapter 13 can save their home.  Therefore, in this post, I would like to review a little about foreclosure law in Georgia and discuss the strategy of using Chapter 13 to stop the foreclosure and reinstate the mortgage.

Georgia law provides for something called a "non-judicial" foreclosure.  This means that a foreclosing lender in Georgia does not need to go to court to get a judge's permssion to take title to a home through a foreclosure.  Instead, the lender is required to fulfil various contractual and legal requirements to pursue a foreclosure.

First, the lender must declare the loan in default.  When you purchased your home, you signed a number of binding legal documents, including a promissory note and a deed to secure debt.  In these documents you borrowed a certain sum of money in exchange for which you promised to pay a specified mortgage payment to the lender each month.  The documents you signed also provided that the mortgage loan was secured by specific collateral – usually your home.  In the event that you fail to pay the installment note as agreed, the note goes into default, triggering a number of consequences.

The most important consequence is some called "acceleration," which means that the entire balance due on the mortgage comes due. Typically, mortgage companies assert their right to accelerate a mortgage after you are three or four months behind – although technically, they could accelerate if you were one day late.

Once your loan is accelerated, you will find that most mortgage lenders are unwilling to reinstate the loan voluntarily.  I suspect that mortgage lenders do not want to be bothered with monitoring numerous repayment agreements in loans that have gone into default.  Sometimes mortgage lenders will work with private companies who promote their services as "mortgage savers," although these home saving programs do not always work as advertised.  Some lenders will not commit to a repayment plan but keep the homeowner hanging on until literally the day before foreclosure before deciding not to cooperate.   If you choose to use one of the mortgage saver services, pay attention to your costs and do not pursue relief in this manner unless you can be assured of a decision well before the last minute.

Once the loan has been accelerated per the loan contract, the lender must abide by Georgia State law in terms of giving you proper notice about the pending foreclosure.  Besides notifying your by mail, the lender must advertise the property for sale in the legal newspaper in the county where the property is located. 

The legal newspaper for your county is not the Atlanta Constitution.  Instead the legal newspaper may be a paper unknown to you.  For example, the legal newspaper in Fulton County is the Fulton County Daily Report.  In Dekalb County, it is The Champion Newspaper and in Gwinnett County it is the Gwinnett Daily Post.  A complete list of the legal newspapers for every county in the State of Georgia may be found by clicking the link.  If this link does not work, you can search for the list of legal organs in Georgia at the Secretary of State's web site.

The pending foreclosure sale must be advertised for four consecutive weeks preceding the sale.  Foreclosure sales are only allowed on the first Tuesday of each month.

If the lender has given you proper notice and has advertised the sale as required by law, on that first Tuesday, on the courthouse steps, an attorney for the foreclosing lender will auction your home to the highest bidder.

The winning bidder must satisfy the foreclosing lender's mortgage obligation, after which he takes title to your house.  Technically, at the minute of the foreclosure sale, you no longer own your house.  There other types of foreclosure sales like tax sales that give you a right of redemption, but mortgage foreclosure sales do not give you any such rights.

The filing of a bankruptcy serves to stop the foreclosure process at any point during that process.  If your house is scheduled to be sold at 10am on the first Tuesday of the month, and you file your bankruptcy at 9:59am, any foreclosure sale will have no legal effect.

Now, obviously, from the perspective of a bankruptcy lawyer, I would not advise you to wait until the last minute.  If the Bankruptcy Court Clerk's computer system should go down, preventing an electronic filing, you would be out of luck.  Additionally, if the mortgage company goes through with the sale (not knowing about your bankruptcy filing) they may as the Bankruptcy Judge to validate the foreclosure because of your inability to pay, your failure to maintain insurance or for several other reasons.

In addition, under the current bankruptcy law you cannot file without going through a credit counseling course and obtaining a certificate.  Often credit counseling organizations get very busy during the days prior to foreclosure, and there is some case law out there to suggest that you may not obtain your credit counseling the same day as you file your bankruptcy case.

The filing of a bankruptcy stops a foreclosure because your bankruptcy filing creates something called an "automatic stay."  The automatic stay is the most powerful element of any bankruptcy in that it stops most creditor actions.  Be aware, however, that under the new bankruptcy laws, the automatic stay may not apply in refiled cases.  If you have filed before, make sure to tell your lawyer.

If you are facing a mortgage foreclosure, you should be very careful not to fall prey to scam artists who will take your money with false promises of special deals or secrets to stop foreclosure.  A bankruptcy filing is the only absolute method to stop your foreclosure and even a bankruptcy may not help you in every circumstance.   Most bankruptcy lawyers – myself included – will chat with you at no charge on the phone to discuss whether bankruptcy is something for you to consider.  Many of the non-attorney paralegal services out there do not have the skills or knowledge to properly advise you.  You most defintely get what you pay for. 

My advice to anyone facing foreclosure is to seek legal counsel with an experienced and licensed bankruptcy lawyer as soon as you realize that you are in trouble and will not be able to make your mortgage payments.  Second, if bankruptcy is an option, get your credit counseling certificate sooner rather than later.  Third, be very hesitant to trust what anyone tells you about stopping a foreclosure.  Do your own research and ask a lot of questions.

[tags] mortgage foreclosure in georgia, chapter 13, advertising for foreclosure, courthouse steps, legal newspapers in georgia [/tags] 

About Jonathan

Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need personal bankruptcy protection. In practice for over 25 years, Jonathan teaches bankruptcy law and practice at legal continuing education seminars and he is a founding member of the Bankruptcy Law Network. Jonathan lives with his wife and children in Atlanta.

Comments

  1. We need help so bad as many many People do We are about to lose our home. We love our home and don’t want to loose it, However it seems our Lender would rather put us out than help us keep it. My Daughter lost her job and it takes more time to recover then even we through. We need reasonable time. Please HELP us!! We have maintained our home in the past, and given a reasonable time to recover We will maintain it again we just need the time. PLEASE HELP us!! As always any and all help is appreciated thank you.

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