You may think that once the awful foreclosure process is over you will not hear from your lender ever again. However, if there is a deficiency judgment form the foreclosure sale, this may not be the case. The bank can come after you if your home does not sell for the full value of the debt owed. This is called a deficiency judgment. How exactly can the bank collect this judgment? Read on to find out how.
Place a Lien on Your Other Property
The bank can place a lien on other personal and real property that you own within the county that the foreclosure took place. This means that the bank then has an interest in these assets and can foreclose on them if you do not pay the deficiency amount.
Garnish Your Wages
The bank can be entitled to a portion of your income if you do not pay the deficiency judgment. The bank can take their share out of your wages each time you get a paycheck. The law usually only allows them to garnish up to 25% pay, and the law also limits for how long they can continue to garnish these payments.
Freeze Your Bank Account
The bank can freeze your account to prevent you from conducting any further transactions or from taking money out of your account. This is often a step the bank takes right before they levy the account, to make sure the funds they are seeking stay in the account until they can withdraw them. You will still be able to receive deposits, you just cannot make any withdrawals.
Levy Your Bank Account
The bank can also take the money owed to them straight out of your checking or savings account. Until the creditor removes the levy the money will continue to be taken out of your account. You may be entitled to exempt a portion of the amount that the bank is trying to take, but it can be easy for the bank to levy your account if you have ever paid them with a check drawn from an open bank account.
Contact You for the Money
The bank can call you directly and ask for the payment, which they will do persistently until you pay. You can request that they stop contacting you directly for the payment, but this will not halt any legal action that they take against you.
Just because the lender has a deficiency judgment against you, doesn't mean they will collect it. Sometimes it is better for the lender to just let the money go, than go through the trouble of forcing you to pay it back to them. It all depends on how much the judgment is for, and how far the bank is willing to go. You may also be able to get the court to vacate or modify the deficiency judgment depending on your situation leading up to the foreclosure. If you work with a good foreclosure defense attorney, they can negotiate with the bank on your behalf to reach an agreement in which the bank will not come after you for the deficiency judgment.
What Should You Do If You're Served a Deficiency Action?
If you are served a lawsuit because a debt collector is trying to collect a deficiency after a foreclosure sale, consult with an attorney. You will have more leverage to work out a payment agreement if you file a response to the case.