Home Foreclosure: When Your Wages Can and Cannot Be Garnished

Nov. 13, 2009 - PRLog -- A common fear for many homeowners who are foreclosure is that their wages will be garnished. This can cause added stress in already difficult financial times. Following is some specific info that will help you to rest a little easier at night as you find your way through what is undoubtedly a  difficult process.

And the answer is . . . No, your wages cannot be garnished – as you go through the process. We’ll discuss when they can be a bit later in this article.

"The reason your wages can’t be garnished as you make your way through the foreclosure process is simple," says Yuwanda Black, lead writer for ForeclosureBusinessNews.com.

"The home itself is the collateral for the loan (ie, your mortgage); not your wages o r other property you may own. So, while your in the process of foreclosure, you don’t have to worry about your wages being garnished."

Facing Home Foreclosure: When Your Wages Can Be Garnished

But, you’re not out of the woods. Your wages can be garnished if, for example, your home is sold in a short sale, there is a balance owed to the lender and they secure a judgment against you.

The Foreclosure Process: What Happens If You Can’t Pay Your Mortgage

Moving forward, if you’re unable to continue paying your mortgage, your home will eventually be sold – in today’s marketing, most likely in a short sale.  

What is a Short Sale?

A short sales is just what the name alludes to. It’s when a property – any type of property – is sold for less than the balance owed on the loan (in this case, your mortgage).

As mentioned above, you could be held responsible for paying the “short fall”, ie, the balance -- depending on what you work out with your bank/lender. This is known as selling “with recourse”.
What you want in these circumstances is to work out a sell “with no recourse.” This means the lender can’t come after you for any balance due on the loan.

Credit Implications for Doing a Short Sale

Your credit will suffer if you move ahead with a short sale, whether its with or without recourse. At this point, however, this is probably something that should worry you too much as your credit is probably already in the dumps anyway.

Now, back to your wages being garnished . . .

Wage Garnishment & Home Foreclosure: Your Rights When Dealing with Creditors

Many unscrupulous lenders will use the threat of garnishing your wages to try to bully you into continuing to pay mortgage you can no longer afford. Don’t fall for it. And by the way, this is a patently illegal debt collection practice.

Do some research into your consumer rights when it comes to debt repayment, as they vary from state to state. But one thing that remains consistent across the board is that creditors can’t bully you, lie to you or threaten you -- on any level. Keep this fact in mind when dealing with creditors and debt collectors – whether you’re discussing wage garnishment during the home foreclosure process, credit card debt or any other kind of debt.

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ForeclosureBusinessNews.com is a one-stop shop for content about the foreclosure industry, ie: short sales, mortgage fraud, real estate sales, etc.