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You’ve foreclosed on your home after being unable to make your monthly mortgage payments. Your lender has then sued you for the deficiency and won the case, resulting in a deficiency judgement against you that the lender will collect. There are two ways deficiency judgments can be collected:

Your Wages May be Garnished

The first way lenders can collect a deficiency judgment from you is by garnishing your wages. With a wage garnish, the lender will take up to 25 percent off of your personal income, which may be more or less depending on your disposable income.

Lenders cannot take more than 25 percent because federal law forbids it. If your wages are being garnished, make sure that the amount taken off is appropriate for the amount you make and falls within legal bounds.

Your Bank Account Can be Levied

Another way lenders can collect deficiency judgments is to use a bank levy. With a bank levy, lenders freeze your bank account and withdraw money from it to pay off your debt. Since your bank account is frozen, you can’t spend the money in it yourself.

However, you may be able to get a certain amount of funds and property exempt from the bank levy so you can continue using your money for basic living necessities like food. All states have laws to protect you from unduly losing property and funds, so you need to talk a lawyer to discuss claim exemptions.

Discuss Options with Your Lender

If you are having lenders collect deficiency judgments from you, talk to your lender to negotiate a repayment plan. If you cannot negotiate one, you have the option to file for bankruptcy as it could eliminate most, if not all, of your debt. Bankruptcy is an option of last resort. Consider all of your options first before filing for bankruptcy, as it can have an impact on your credit score.

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