subject: Home Foreclosure: When Your Wages Can And Cannot Be Garnished [print this page] A common fear for many homeowners who are foreclosure is that their wages will be garnered. 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 home foreclosure process is simple. The home itself is the collateral for the loan (ie, your mortgage); not your wages or other property you may own. So, while you're in the process of foreclosure, you don't have to worry about this.
Facing Home Foreclosure: When Your Wages CAN Be Garnished
But, you're not out of the woods yet. 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 market, most likely in a short sale.
What is a Short Sale?
A short sale is just what the name alludes to. it's "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
Yyour credit will suffer if you move ahead with a short sale, whether it's with or without recourse. At this point, however, this is probably something that should not 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 a 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.
