After the home foreclosure sale is completed, many homeowners mistakenly believe all their debt obligations are finished. In many cases, the sale price of a foreclosed home is less than the amount of debt still owed to mortgage lenders — this difference is called a deficiency. In Florida, lenders are allowed to sue borrowers for that deficiency and may obtain deficiency judgements from the court making borrowers legally obligated to pay off the deficiency.
If the borrowers are not able to pay off the debt owed, as is usually the case with financially strained homeowners who just went through foreclosures, lenders can pursue multiple mortgage debt collection methods. This is when the help of an experienced Miami foreclosure defense attorney is crucial for those facing a deficiency judgement. In order to satisfy a mortgage debt, lenders or second party debt collectors can garnish wages, levy or freeze bank accounts, and even put liens on borrowers’ other personal property.
Lenders who successfully obtained deficiency judgements (or second case debt collectors who buy borrowers’ deficiencies) can take a portion out of borrowers’ employment income until the deficiency is paid. Depending on state laws, there is often limits on the portion lenders can take out of pay checks as well as limits on how long they can consecutively garnish a homeowner’s wages. According to federal law, lenders can garnish only up to 25 percent of take home pay (percentage is further decreased for low-income borrowers).
Levying Bank Accounts
With deficiency judgements, lenders or debt collectors can levy or even freeze homeowners’ bank accounts until the deficiency is satisfied. Levying bank accounts means lenders take cash directly from borrowers’ bank accounts to go toward paying the debt. In such cases, borrowers are often entitled to partial or even full exemptions — discuss options with a knowledgable Miami foreclosure defense attorney.
If lenders do not pursue wage garnishments or bank account levies, they may choose to place judgement liens on the borrower’s other personal property, giving them a security interest in that property. This personal property can include the homeowner’s other real estate holdings or other valuables like jewelry, business assets, art, electronics, and equipment. Generally, the homeowner’s essential items like their car and primary residence are exempt from judgement liens.
If you are facing a deficiency judgement and your lender is pursuing one of the above methods to collect the deficiency you owe, enlist the help of an experienced Miami foreclosure defense attorney. Since deficiency judgements are legal orders, in order to prevent the mortgage debt collection they authorize from further harming your financial situation, you must take appropriate legal action. To learn the defenses and exemptions you qualify for, call Graham Legal today for a free consultation.