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Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 30908
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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What are the penalties in Tennessee for foreclosing a home

Resolved Question:

What are the penalties in Tennessee for foreclosing a home?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 7 years ago.

Hi - I practice in Tennessee.


If the property goes into foreclosure, a notation will be placed on your credit report and it will negatively affect your credit for at least 4 years. How much it will drop your score is hard to say as it depends on your other credit history/performance, etc. However, it will not be good and you'll have a tough time trying to get another mortgage for a while - unless you have a joint debtor or co-signer.


As for taxes, it is possible that you'll receive a 1099 if the property is sold for less than you owe on the house. This is so because you're benefiting from the sale as it reduces your liability.


In Tennessee, a deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage secures. Thus, if your property sells for less than what you owe, the lender can seek to recover the difference from you.

Customer: replied 7 years ago.

If I can't pay back the difference of the public auction, what is the probability of success a lender has to take away my assets such as money in the bank and my current house that I am living in (not the foreclosed property), cars, etc...? My credit score is excellent...about 775. I am not as concerned with the dropping of the credit score. I'm concerned with how much I am going to owe out of pocket after it is over and if lenders have had a good success rate with going after the deficiency. For example: I owe $150,000 on the loan and it will probably sell at auction around $110,000 to $125,000...


Expert:  Roger replied 7 years ago.

If there is a deficiency after the sale, the lender will have to file a separate lawsuit for a judgment in the amount outstanding. Once a judgment is awarded, the lender can garnish your wages, bank accounts and any property that is lien-free. Because your new house and vehicle likely have liens/outstanding loans, this creditor will not come after that.


It is most likely that the lender will try the garnishment unless you own valuable property free and clear.

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