Can The Lender Garnish Wages in a Foreclosure?
A mortgage loan is a secured debt in that the lender protects their loan with the home as collateral. Much like auto loans, or other secured loans, the mortgage loan contract states that if the borrower fails to make payments toward the loan, the lender can take the home in order to recoup their losses. Oftentimes, the collateral on the loan is enough to cover the entire loan amount or at least what’s left of it. Therefore, the lender does not need to come after any of the borrower’s other assets in order to make their money back. For this reason, a homeowner’s vehicle, additional properties, bank accounts, wages or other valuable assets are not at risk during a foreclosure.
While wages are not at risk during a foreclosure, in some cases they can be at risk after one. In some situations following a foreclosure, a lender can seek a deficiency judgement. If granted, a deficiency judgement orders the former homeowner to pay a remaining amount of their unpaid mortgage – even after the home is foreclosed on and sold. Read more about what a Deficiency Judgement is and when it can be ordered. At the point that a deficiency judgement is ordered, the foreclosed house is already sold and can no longer be used as collateral on the additional amount the lender is seeking. This judgement from the court allows the lender to come after other assets, bank accounts, or property if the amount cannot be reached. Wages may also be garnished to help recoup the amount owed.
The fortunate thing for homeowners is that a deficiency judgement must be issued through a judicial process, essentially a lawsuit, against the former homeowner. This process generally takes time and money, both of which mortgage lenders oftentimes do not want to bother with. The money spent on legal fees may very well exceed the amount they’re seeking, therefore making the entire process not financially worthwhile.
The quick answer to the concern of losing wages after foreclosure, is it’s possible, but unlikely. If you are experiencing or expecting foreclosure, consult with an experienced foreclosure defense attorney as early in the process as possible. Our team can help identify and explain options as they apply to your specific situation. To schedule a meeting with our team, contact our office at (702) 998-1188, email@example.com, or schedule a consultation online.