If foreclosed can wages be garnished?

vera123November 22, 2009

Hi, I am not new & occasionally post on the Home Decorating or Cooking/Gardening forum.

Question is for my daughter & hubby. Their home was/is being foreclosed on in Virginia. They moved out in July since they knew it was inevitable, & are trying to get their finances back in order. She tells me that she thinks they need to file bankruptcy so their wages aren't garnished. They really don't have any bills other than student loans & medical bills, so won't be including those IF they do file. I really hate to see them file & totally ruin their credit. Due to job changes, they don't make a lot of money, but it's more than what qualifies them for legal aid. Any advice? Thanks!

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As a guess, they probably can't be garnished due to mortgage laws. However, they should check with an attorney. If you or they don't want to pay, Google legal forums and post the question to one of them.

    Bookmark   November 22, 2009 at 5:50PM
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They really do need to an attorney. If the loan company turns it over to a collection agency, they have to go to court first. When they moved out did they turn it back to the bank/loan co? No matter what they do it will take a long time. They really need some legal advice for the state/area they are in and beaware that bankruptcy laws have completly changed. They still can get legal advice on a one time only free if they call/look around and many attorneys will work on a payment plan etc.

    Bookmark   November 22, 2009 at 5:57PM
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" If the loan company turns it over to a collection agency, they have to go to court first."

Not correct.

Any debt can be sold off (or assigned) to a collection agency without any court proceeding.

Virginia uses Deeds of Trust to secure real property.

The trustee can foreclose with no court involvement, one of the advantages of Deed of Trust for a lender.

The owner of the mortgage note notifies the trustee the borrower in in default under the terms of the deed of trust.

The trustee then uses the mechanisms defined in the deed to foreclose the property for the lender.

The lender can seek a deficiency judgment against the borrower if they do not make enough money from the property sale to cover the note and expenses.

Not many pursue this path though, since it is hard to recover anything from someone who has lost their house already.

Bankruptcy can only slow the foreclosure, not prevent it.

    Bookmark   November 23, 2009 at 9:37AM
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I think mariend meant that the collection agency would have to go to court before they could garnish wages.

Anyway, if your DD and SIL are considering bankruptcy, they are going to have to go to a government approved credit councilor before filing. Scroll down to the "If you need help section" and you can follow the links to the approved counselors in your state.


Also, you DD and SIL really should get in contact with the lender and see what their options are. If they haven't been making payments for the last several months, many lenders are choosing to find some sort of compromise instead of foreclosure - at least the smart ones are.

    Bookmark   November 23, 2009 at 11:46AM
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Thanks everyone for the help. They were working with some non-profit agency & their lender. Unfortunately, the lender agreed to work with them, BUT increased their monthly payment by $230 in order for them to catch up the escrow!!! Well there was no way they could afford that! So they simply walked away like so many others. I have suggested she contact the realtor they bought the house from a few years ago & see if he can direct them & to also contact the non-profit that they were working with. I would have thought the lender would have been happy to just get the "normal" monthly payments instead of having a foreclosure on their hands. They are on a budget now & really making an attempt to start saving & I just don't want to see them take another step backwards. I will pass the link for counselors on to her......Thanks again!

    Bookmark   November 23, 2009 at 12:16PM
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