What You Should Know
amount of the sale usually must be enough to pay off
the loan in full (although lenders occasionally take less).
Another possibility is to ask your lender to take
the house back in what is called a “deed-in-lieu” of
foreclosure. In a deed-in-lieu, the lender forgives
your obligation to repay the remainder of the debt in
exchange for the property. Depending on how much
you owe compared to the value of your property,
a deed-in-lieu may protect you from a “deficiency
balance”. On some types of mortgages a lender can
pursue a judgment against you for the amount you
still owe after the sale if the proceeds of the sale are
not enough to pay off the debt. If a judgment for this
“deficiency balance” is obtained through a lawsuit filed
against you by the lender after the foreclosure sale,
the lender could then garnish your wages or bank
accounts or take other steps to collect the deficiency.
Lenders will usually accept a deed-in-lieu only if there
are no other liens against the property and you already
have, or agree to vacate the property within a very
short period of time.
The material contained in this pamphlet provides general
information and is intended to inform, not to advise. It
is always best to consult an attorney about your legal
rights and responsibilities. This pamphlet is published by
the Alabama State Bar as a public service. Copies of this
pamphlet and others are available on the Alabama State
Bar’s Web site at: www.alabar.org/brochures.
Special acknowledgment to Legal Services Alabama,
the Alabama Civil Justice Foundation and the Alabama
Access to Justice Commission
Alabama State Bar
415 Dexter Avenue, Montgomery, AL 36104
Phone: (334) 269-1515
Fax: (334) 261-6310
Q: Can bankruptcy help me avoid foreclosure?
A: Yes, depending on the type of bankruptcy case
you file. Bankruptcy is a complex matter; if you are
considering it, you may want to consult an attorney
with bankruptcy experience. The