After foreclosure, will the bank sue a person or couple for the remaining balance due?

Question

Will or can banks garnish your paychecks after foreclosure?

Answer 1

1.  Yes they can.  The reason that banks sometimes don't, is if the legal fees to collect exceed the amount that they are trying to recover...they will let it go.

2.  Banks cannot directly garnish your wages....they have to go to court to get that right..just like anyone else...and they have to be awarded a judgement FIRST before hand.  So, you are never, ever going to pick up your paycheck and see a random garnishment...unless you have ignored a huge stack of letters and a court notification requesting your appearance.

3.  NO STATE is a non-recourse state.  The reason this myth is perpetuated on Yahoo! Answers is different states have different CRITERIA for how the mortgage has to handled and if the bank violates that, THEN there is no recourse.

However, banks will not loan in a state where there is no recourse...period.

This is why, in some states, you cannot get a second mortgage b/c they have laws in place that all junior liens (regardless of type) get wiped out with a foreclosure...so, banks just don't offer second mortgages in those states---period.

Texas used to be one of them..not sure if they still are.

Answer 2

Yes...it is called a DEFIENCY JUDGEMENT.....however with the wave of foreclosures i dont think they are actively pursuing the judgements....but you will have it on your cedit report.

Answer 3

Usually no they cannot.  The bank has already taken the house they cannot go after your personal assets if this is a residential mortgage.

Answer 4

The answer depends on the state you live in and the amount that you are going to be short.  

Some states made mortgages completely NON-RECOURSE which means that they can only take the house (no recourse other than the collateral of the loan).  Other states and other loans are RECOURSE loans which means that they certainly can come after you.  

If you have a recourse loan it doesn't mean they will definitely come after you, but they can.  If the loss is really large or you took a bunch of money out right before the foreclosure or they have noticed that you bought another house before letting this one go, then they are much more likely to come after you.  

A bank cannot garnish your paycheck.  Only a court can do that.  They way a bank goes about it is to get a deficiency judgment against you and then getting the court to garnish your checks as a way of satisfying that judgment.  

good luck!

Answer 5

they can and it's best to speak to an attorney. The banks can garnish whatever in trying to retrieve what money is owed on such property and even hit your paychecks. that is why it is best to get an attorney, for they can stop such from happening and protect your rights. Good Luck!

Answer 6

Most likely, no.

Answer 7

It depends on the foreclosure laws in the state you live in. In Wisconsin they can either give you 6 months to pay off the mortgage, and if you don't they'll foreclose and waive the deficiency OR they can give you 12 months to pay off the mortgage, and if you don't they'll foreclose and then you'll owe them the difference between what they sell the place for and the amount you owed them (so if you owed them $300,000 and they are able to sell it for $200,000 you'll owe them $100,000).

Different states also have different laws about creditors garnishing wages.

Answer 8

Can they?  YES. Will they go through the process required? NOT LIKELY since someone in some major city in another part of the country would have to make the decision and handle the process.

Answer 9

The bank CAN come after you (sue) for the deficiency but they'll most likely simply write it off since it's not worth the cost.

Now, what can happen here is that this amount is provided to the IRS and they (the IRS) can treat that amount as income and tax you on it.  Now, the bank cannot directly garnish wages but the IRS can indeed do so if the additional tax isn't paid.