Foreclosure ???

[southernmama]

Anyone here been through a foreclosure? We have a dismissed chapter 13 in December 2019 but before the dismissal, our lawyer suggested we let our house go back. Now that we’re dismissed and super behind on payments and getting letters from lawyers, will they garnish us? Anyone with any experience in this?

[justbroke]

I have epxerience, but your experience depends on local laws. In some States, your mortgage creditor has something known as "recourse." This means they have recourse to collect from you. So, if the property sells at foreclosure for less than what you owe (which is nearly certainly will), then the difference is called the deficiency. The deficiency will include court costs, lawyer fees, alte fees, interest, and the difference between your balance and what the home sold for at auction. In those States that allow recourse, the creditor can come after you by seeking a judgement against you for the deficiency.

That deficiency judgement could be enforced through levy and/or garnishment.

A bankruptcy would wipe out your liability to pay the deficiency. Otherwise you will be at the mercy of the creditor should they be allowed to and choose to pursue foreclosure and judgement.

In my case, I agreed to surrender the property. They were also going to give me cash for keys but it created too many issues (a really complex case which ended up being so comical in the end). I didn't get the case, but they also agree not to pursue a deficiency judgement. (The fact that they didn't pursue a deficiency judgement was in the settlement paperwork, but I was in bankruptcy anyway so it would have been discharged regardless.)

I highly suggest figuring out what you want to do and where you want to be in the future. If you want to own again, weigh the differences between a deed-in-lieu, short sale, settlement and straight foreclosure.