Can my Second Mortgage Company sue me After Foreclosure in Georgia?

Yes, a second mortgage company can collect on a deficiency balance after a foreclosure in Georgia. When Georgia homeowners go through foreclosure and lose their home, they often think that the worst is over. However, if a person has a second mortgage, this is not necessarily the case. A foreclosure will not necessarily extinguish the debt of a second mortgage, especially if the property owner owed more on the house than it was worth.

After a property has been foreclosed upon and sold, a lender can still collect money owed under the second mortgage, even if the second mortgage was acquired through the same bank as the first mortgage. After foreclosure, the second mortgage lender can use all legal means to collect the debt including a lawsuit, seizure of bank accounts and garnishment of wages.

This is one of the primary reasons why either a Chapter 7 or Chapter 13 bankruptcy can be a very smart option for homeowners facing foreclosure. When you file for bankruptcy, foreclosure proceedings stop, which buys you time and breathing room. Additionally, when you file Chapter 13 bankruptcy and you owe more on your home than it is worth, you may be able to “strip the lien” on the second mortgage. Stripping the lien converts your formerly secured mortgage into unsecured debt and is wiped out upon the successful discharge of your bankruptcy case.

If you have acquired medical debt and are considering filing bankruptcy in Georgia, it is important to seek the advice of a qualified attorney. For a free initial consultation please contact the Law Offices of Charles Clapp at 404.585.0040.