Why is an Alabama foreclosure so bad?

I was recently asked this question — “What is so bad about a foreclosure?”  The person who asked this lives in Alabama and was asking in a very sincere way.

And it got me thinking that I have not ever discussed the actual specific negative consequences of foreclosures.

So let’s do the following three things:

  1. Quick summary of foreclosure procedure
  2. The short term consequences of a foreclosure
  3. Long term consequences of foreclosure

Quick summary of the foreclosure procedure/process

If you fall behind, you will eventually get a “notice of default” letter telling you that you are in default. You must fix the default in 30 days or the loan will be accelerated and then a foreclosure sale will occur.

The foreclosure sale is where your property is actually sold outside the front entrance to the courthouse in your county.

Proof of the sale is the executed (signed) foreclosure deed.

Then you will be told to leave the house and, if you don’t, you will be sued for ejectment (eviction).

Short-term consequences of a foreclosure

At the sale, and when the foreclosure deed is executed, your property is no longer yours.  It goes to the person or company that bought the property.  You have lost the property from a “legal” perspective.  (Do keep in mind many of these foreclosures are bogus but the “deed” will show you no longer own the property).

Since you do not own the property, you will be told to leave.  Even if you have no where to go.  Even if your kids are in the middle of a school year.  None of that matters.

If you don’t leave, you will be sued (ejectment lawsuit).

In the lawsuit, you will normally be sued for money damages for staying in a house that does not belong to you.

If you lose this case, a sheriff’s deputy will literally tell you to get out and get all of your stuff out.  Sometimes they give you a few days — other times they are not so generous.

Your credit report will show a foreclosure which is a major negative.

There are other short-term consequences but the above is enough for our purposes.

Long-term consequences of a foreclosure

What if you owed $200,000 but the foreclosure sale only produces $150,000?  That “$50,000” is a deficiency and you can be sued for this.

Whenever you apply for any type of credit, you will likely be asked if you have ever been foreclosed.  This becomes a part of your permanent record.

The foreclosure can stay on your credit reports for up to 7 years and likely will greatly damage you.

If you get sued and lose — whether for ejectment or deficiency — this can go on your credit report.

And you’ll have to say you were sued and lost.

We haven’t talked about the short term and long term emotional distress that comes from literally losing your home.

So, what should you do to avoid a foreclosure?

You can file bankruptcy (but we think it is normally a terrible idea) or you can sue your mortgage company to have a judge decide about the sale.

Look, you don’t have to sit around and wait on the mortgage company to decide (at the last minute) whether they will take your home or not.

You sue — as you have the right to do under your mortgage — and then you can be on the offensive instead of waiting for “the other shoe to drop”.

It is easy?


Is it guaranteed to work?

Nope — just taxes and death, right?

But it gives you a great chance of success if you sue the right way, in the right court, at the right time, with the right theories.

If you want to know if we can help you stop your mortgage company from taking your home, either call us directly at 205-879-2447 or fill out our contact form below and we’ll get right back with you.


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