Loan default litigation is a legal process initiated when a borrower violates the repayment schedule stipulated in a loan agreement. In Georgia, where the volume of credit obligations is high, this service is vital for both creditors (banks, microfinance organizations, private lenders) and borrowers (individuals and legal entities). The dispute may involve mortgage-backed loans, business credits, or consumer loans. In the event of default, the creditor initiates enforcement procedures, which may include asset seizure and auction. On the other hand, the borrower needs protection from disproportionate penalties, debt restructuring, or suspension of enforcement. This service involves representing parties in court, arbitration, and the National Bureau of Enforcement.
What Does the Loan Default Litigation Service Cover?
The service covers all stages related to debt recovery and defense:
- Debt Recovery Litigation: Preparing the creditor's lawsuit demanding payment of the principal amount, interest, and penalties.
- Enforcement of Mortgage and Pledge: Legal support for the realization of real estate or movable property to cover the debt.
- Borrower Defense: Representing the borrower to reduce unreasonably high penalties or invalidate unfair contract terms.
- Restructuring Negotiations: Mediation between the bank and the client to agree on a new payment schedule and avoid enforcement.
- Auction Procedures: Participation in disputes related to auctions by the National Bureau of Enforcement, such as appealing incorrect property valuation.
Common Scenarios and Real Situations
Disputes related to loan defaults often develop under the following scenarios:
- Mortgage Default: A family lost income and cannot pay the apartment loan. The bank demanded the sale of the apartment at auction. A lawyer intervenes to stop the auction and achieve a grace period.
- Business Line Freeze: A company violated overdraft terms. The bank seized the company's accounts, halting business operations. It is necessary to lift the seizure to continue operating.
- Private Usury: A private lender demands interest higher than legally allowed and threatens the borrower with eviction. The lawyer challenges the contract due to non-compliance with the law.
- Joint Liability: A surety finds themselves obligated to pay someone else's debt because the principal borrower has disappeared.
Georgian Legal Framework
Loan default disputes are regulated by the Civil Code of Georgia. The Code establishes rules for loans, mortgages, and pledges, and also limits the amount of penalties (e.g., cap on annual interest). The procedural part is governed by the Civil Procedure Code of Georgia and the Law on Enforcement Proceedings. Regulations of the National Bank of Georgia regarding lending and collection ethics are also important. The National Bureau of Enforcement is the main body enforcing court decisions, although banks often have the right to use a "Notary Writ of Execution" via a simplified procedure.
Service Process: What to Expect
If you are a creditor, the lawyer will prepare a warning letter, then a lawsuit, and ensure the seizure of the debtor's assets. If you are a borrower, the lawyer will examine the loan agreement, calculate the correctness of accrued penalties, and prepare a defense statement. The court process can last several months. Often, the best solution is a settlement, where the lawyer helps you agree on debt forgiveness or installment payments.
Why Choose Legal.ge?
Loan default cases are stressful and complex. Legal.ge connects you with experienced lawyers who know both bank strategies and debtor protection mechanisms. They can help you avoid losing property or, conversely, help you recover owed funds. Do not wait for the enforcement police — contact a specialist on Legal.ge in time.
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