Question: A few years ago, I took out a second mortgage from my primary residence and made a few unsuccessful investments with that money. Subsequently, I was forced into Chapter 13 Bankruptcy and I surrendered all of assets I had acquired as investments. Chapter 13 Bankruptcy did not take care of my second mortgage. Now I need to get a loan modification on both: my first and second mortgages to stay in my primary residence. So far the banks have not been cooperating. I will stop paying both mortgages as I can save that money to find another house to rent. The first mortgage will be covered in a foreclosure sale, but the second will not. Can the bank come after me for the difference and garnish my wages?
Response: Essentially, foreclosure should be your last resort. Mainly, it is because of the deficiency judgment. Yes, banks can obtain a deficiency judgment and go after your assets or garnish your wages to satisfy the debt although sometimes the bank can make an exception. If you know you are willing to surrender your property, then you are better off doing a short sale, especially because on your primary residence this year, any debt, that is forgiven is not subject to capital gains taxes. Consider doing a short sale or deed-in-lieu to avoid negative financial consequences.
In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.
The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
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