Once my Mortgage Lender Starts the Foreclosure Process, Can I Stop It Without Having to File Chapter 13 Bankruptcy?

Georgia foreclosure proceedings are non-judicial in nature. This means that your lender can institute foreclosure proceedings that will result in the sale of your home on the courthouse steps, all without having to go to court.

The foreclosure process begins with a “default.”  Under the terms of your home loan, you agree to make regular payments (usually every month).  Your loan most likely also provides that if you miss a payment, your loan is considered “delinquent.”  Usually, mortgage companies will allow a two or three month delinquency before declaring that your loan has gone into default.

Your mortgage loan agreement specifically describes what is meant by a default.  Every loan is a little different but as a rule, when a loan goes into default, the entire unpaid balance is declared due.  Under such an “acceleration clause” you would, upon default, owe hundreds of thousands of dollars.

Now if you happen to win the lottery and have several hundred thousand dollars sitting around, you can pay off your loan.  Assuming that this is not the case, your failure to tender the full balance within a set time (such as 7 or 14 days) will result in the start of a formal foreclosure process.  If you have failed to abide by the terms of your installment loan and if you do not have the cash to pay off your mortgage, the foreclosure is the process by which your mortgage company takes title to your property away from you.

Once a loan is accelerated and the file turned over to a foreclosure lawyer, it is very difficult to stop the process.  We sometimes speak with clients who are communicating with their lender even after the foreclosure advertising is going on.  Sometimes lenders will agree to stop the foreclosure if very specific terms are met.  However, it has been our experience that actually hammering out an agreement that stops a foreclosure is very difficult.  Several of our clients report that they felt that the lender was leading them on about the possibility of stopping foreclosure, only to receive a final “no deal” a day or two prior to the actual foreclosure.

We are not saying that negotiated deals to stop an active foreclosure is impossible, but we advise you to be very careful not to allow too much time to pass, and certainly do not assume that a deal can be struck while you do nothing to prepare for the bankruptcy option.

We have also heard from clients about “foreclosure relief” companies that promise to intervene on behalf of homeowners to stop foreclosures.  Here, too, you should be very careful.  Check the reputation of the company with the better business bureau.  Ask for references.  Any by no means discount the possibility that you may need to file a bankruptcy should negotiations break down or if the foreclosure relief company disappears.