can a mortgage company garnish wages when in foreclosure
The most common process for creditors to collect money when amount due becomes exceptionally delinquent is wage garnishment. In order to garnish, an unsecured debt one must first take legal action against the defaulter. Normally this does not transpire until the debt is somewhere around six months past due. The creditor brings a claim in small claims or civil court, in accordance with the magnitude of the debt. If the outcome is in favor of the creditor, a judgment is ordered. Once you win a judgment in court a notice of judgment is sent to the debtor and creditor. The debtor is ordered to pay the creditor with in 30 days of the judgment. If the judgment is unpaid then there is a potential for a wage garnishment. There are other recourses one being filing a lien against personal property. Bankruptcy can halt the process.
There are many more legal actions that can take place once a judgment is filed but to answer your question. Lenders do not garnish wages for a property that is in foreclosure or that has been foreclosed upon. Many lenders write off the loss and 1099 the homeowner for earned income and report the earnings to the IRS. Although, some lenders seek a deficiency judgment which attaches to anything you own.
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