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Deficiency judgements.

Atlanta, GA |

Can you be sued for deficiency judgement "before" a foreclosure auction? If not, do most mortgage companies file a deficiency judgement immediately after the sale?

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No, as there is no deficiency until they establish one through a post sale confirmation process. Most mortgage companies don't go through the trouble either. Unless you have BB&T or a bank taken over by the FDIC, a deficiency judgment is rare.

The above information is general in nature. In order to obtain more specific and legal advice upon which to base your important decisions, please contact our office directly for a free phone or in person consultation. Robert M. Gardner, Jr. Hicks, Massey & Gardner, LLP EMAIL:, OFFICES: 53 W. Candler St., Winder, Ga. 30680, 106 Washington Street, Jefferson, Ga. 30549, Or 718 Oak St. Gainesville, Georgia. PHONE: (770) 307-4899 or (770) 538-0555 serving metro Atlanta and all of Northeast Georgia Bankruptcy, Divorce, Personal Injury, Worker’s Compensation, Medical Malpractice, Adoption, Civil and Criminal Litigation


There is no deficiency until a foreclosure sale. They often have the option of suing on the note instead of foreclosing.


1. No, you cannot be sued for deficiency judgement before a foreclosure auction.

2. The mortgage company must begin promptly in Georgia; in some other states with different laws, they wait several years until you have better income, then rise up out of nowhere and sue.

It used to be quite rare to sue for deficiency judgment after a GA foreclosure, but it is becoming more and more common.



Thanks for the information. Based on your experience, are these deficiency suits starting to be filed immediately after the foreclosure sale? I am asking because I have been advised by some to file Chapter 7 now (before the sale), and others have recommended that I wait to see what the mortgage company will do.


A "deficiency" is the difference between the amount of the the mortgage and the sale
price of the home at the foreclosure sale, which is usually artificially low. For example, if your
house is appraised at $250 K and has a mortgage of $200 K, and at the foreclosure sale no one
bids more than $150 K, then the "deficiency" is $200 K minus $150 K = $50 K. That means you
personally, aside from the mortgage, owe the mortgage company $50 K after the mortgage company takes your house. And this is in spite of the fact that the mortgage company will turn around and sell the house for $250 K and already sold the mortgage for $200 K, so the mortgage company's profit on the foreclosure will be $250 K (less attorneys' fees) , not including the deficiency judgement.

Therefore, three things: (1) there can be no deficiency until the moment of the foreclosure sale. (2) If my example is typical, any deficiency judgment would be unfair. Because of this, many
jurisdictions have an unwritten policy of not allowing deficiency judgments. This is the case in
Chicago, where I practice. Cook County courts do not allow deficiency judgments even though
the law provides for them. I would expect that in other jurisdictions the policy varies from judge to judge as well as from county to county. Therefore, you must consult a lawyer in Atlanta to know what will happen to you. (3) Remember that a deficiency judgment, unlike a mortgage, is a "personal" debt not secured by the property and therefore is easily dischargeable in bankruptcy.

Lastly, you seem not to consider the possibility of resisting a coming foreclosure. Many foreclosures can be challenged by the homeowner on the ground that the mortgage company lacks standing to sue, because it typically does not own the mortgage and therefore has not been harmed by any default. But for this, you absolutely must have a competent lawyer, and he
must have had successes in Atlanta. My firm, Property Rights Law Group, does not practice in Georgia, so we are not authorized to advise you as to litigation. But our website,, may be of some help in discussing the general issues.
--Riobert L. Stone

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