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Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 31684
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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I live in Georgia. I will retire in a few months and cannot

Resolved Question:

I live in Georgia. I will retire in a few months and cannot continue to pay my house note. The house is probably worth less than I owe, but in any case there is no market right now. What if I just walk away? What are the consequences legal and tax wise? I will have no debt and no other income besides social security. I have some savings which will get me by. I don't plan on buying another home.
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 7 years ago.
In Georgia, if you walk away, the lender will foreclose on the property and sell it at auction to the highest bidder. A deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount that the underlying mortgage secures. The lender must seek a deficiency judgment within thirty (30) days after the foreclosure sale. The foreclosure sale must be confirmed.

If a deficiency judgment is obtained, the lender can garnish wages, bank accounts or attach other lien-free property to create cash to pay off the debt.

Customer: replied 7 years ago.
It will no doubt sell for less than the debt. What alternatives do I have? I will have no wages, but there are my modest savings.
Expert:  Roger replied 7 years ago.
You can certainly try to sell the property. However, any deficiency would still be your responsibility.

The best thing would be to issue a deed in lieu of foreclosure to the lender. This avoids foreclosure and also extinguishes the lender's right to seek a deficiency judgment against you.

The catch is that the lender has the right to accept or decline the deed in lieu. If the lender doesn't believe that it can sell the property for at least what is owed, it may be tough to get them to accept. However, it is worth a try.

The best thing in this instance is communication. Be up front with your lender and they'll try to work something out with you. Although it may not seem to be the case, they don't want to foreclose any more than you do! It's just more trouble for them, plus they're looking at taking a loss.
Customer: replied 7 years ago.
Wouldn't that be a judicial foreclosure? I thought they rarely if ever did that in Georgia
Expert:  Roger replied 7 years ago.
No, a deficiency judgment is not the same as a judicial foreclosure. Seeking a deficiency judgment comes AFTER the foreclosure (judicial or non-judicial) occurs.

It is a separate action the lender can initiate after the foreclosure in order to obtain a judgment and attempt recovery of the difference between the loan payoff and the amount recovered from the sale of the property.

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