Hector Milla runs his corporate website at http://www.OpsRegs.com where you can see all his articles and press releases.
Can a Creditor Garnish Your Wages After a Foreclosure has Gone Through?
There are many questions that race through your mind when you are facing a foreclosure. One of the most common questions is why is if your mortgage lender can garnish your wages.
This cannot be answered with a yes or no as it is dependent on your state and mortgage terms. However, for the most part it is illegal for any institution (other than a few government agencies) to garnish your wages without first suing you.
That brings the question; can a mortgage company sue for the difference between the amount owed and the amount of the foreclosure sale?
Natalia Osorio Editor of the “Loan Modification Foreclosure” website — http://www.LoanModificationForeclosures.com — pointed out;
“…Again this will be dependent on the state you live and your mortgage terms. However for the most part it is an option that mortgage companies can use, although it is uncommon. Mortgage companies lose an average of $100,000 per foreclosure. Suing a client will take years and also cost doubles the amount in legal fees. Therefore lenders tend to cut their losses and do not pursue legal action…”
The exception to this is if you, the borrower, owe a very significant amount and they thought they would be able to recoup more money than they would lose by pursing legal action. For example, if you owed $500,000 and you foreclosed for $250,000 the mortgage company may decide to sue you in hopes of recouping around $50,000.
One thing that most people in the foreclosure process may not realize is that while the mortgage company may decide not to go after you for the difference in a foreclosure, the IRS will. The government will not see the foreclosure. All they will see is a large debt paid off and portion of that debt forgiven. Therefore they will count the difference from the sale price and the amount owed as income. It will also be taxed as though it is income. Therefore Uncle Sam may just hit you with a fairly hefty bill come tax time.
One way to ensure that the mortgage company and the IRS do not come after you for the money is by claiming bankruptcy. This is not recommended as it looks far worse on your credit report than a foreclosure and it will stay on your record for ten years.
“…The best thing to do is to stop foreclosure all together. There are many foreclosure assistance companies that will help you consolidate your debt into affordable payments. Do some research and find a specialist that is in good standing with the BBB, is certified, and has a qualified staff to help you through this difficult process. Saving your home, and your credit score, will prove to be well worth the effort in the future…” N. Osorio added.
Further information about how to get professional assistance with a mortgage loan modification by http://www.LoanModificationForeclosures.com
Originally posted 2010-01-21 20:04:46. Republished by Blog Post Promoter
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