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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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Hello again! I was wondering if the foreclosure happens and

Customer Question

Hello again! I was wondering if the foreclosure happens and they try to garnish my wages for the amount they did not receive in the sell can I put more in my 401k so it would show I dont bring home as much? Could they touch that?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 5 years ago.

Hi again!

Unless you take home less than $217.50, wage garnishment is based on gross pay, not take-home pay. Therefore, putting more money in a 401K would not decrease the amount that can be taken in a garnishment. Nice try, though!

Customer: replied 5 years ago.
Do they usually give you a chance to set up payments before they garnish your wages?
Expert:  cfortunato replied 5 years ago.
Before they garnish your wages, they have to go to court to get a judgment. While the case is in court, the lender will usually allow the debtor to agree to make payments, because this is easier for the lender than garnishment. This agreement will be put in writing, and is called a "Stipulation". If the debtor misses a few payments, the lender can - at that time - garnish the debtor's wages.
Customer: replied 5 years ago.
I read on my mortgage companies website that I had to be late 90 days in order for them to consider a deed in lieu of. I would hate for my house to sit their empty going bad that long. Is there anything I can do to try and speed the process up?
Expert:  cfortunato replied 5 years ago.

Mortgage companies are pretty much set in their procedures, and will not make exceptions to their rules. Most of the mortgage companies require at least a few months of non-payments before they will consider a deed-in-lieu. In other words, unfortunately, there is nothing you can do to speed up the process.

Customer: replied 5 years ago.
In Georgia it looks like when they do the foreclosure process they dont take you to court they sell on the steps at the court house. If they sell on the courthouse steps is that the price that they take their price from to figure how much they charge me back? Say I owe 100,000 and they sell it that day at the courthouse for 60000.00 Is the total I owe 40000.00? How long do they usually give to pay that back?
Expert:  cfortunato replied 5 years ago.

There are 2 types of foreclosure: 1) judicial, and 2) non-judicial. The judicial foreclosure takes place in court, and the non-judicial foreclosure takes place outside of court.

Either way, the lender must go to court to get a deficiency judgment after the sale, for the difference between what the house is sold for, and the balance on the mortgage. If you owe $100K, and house sells for $60K, and the $60K is a reasonable price for the house, the lender can get a judgment for $40K.

I don't know of anyone who has paid back a deficiency judgment. Most file a Bankruptcy to get rid of it.

Customer: replied 5 years ago.
Well thats really hard to think about. Its hard enough to think about foreclosure. I feel like Im stuck I know I make to much for chapter 7 so I would have to do chapter 13. Then if that happened they wouldnt give me a chance to set up payments for it would they? Would they just automatically garnish my wages? Would I have to go bankrupt on all my credit cards?
Expert:  cfortunato replied 5 years ago.

Yes - if you file a Chapter 13, that is exactly what happens - you make monthly payments for 5 years. The monthly payments are based on your disposable income - your gross pay minus allowable expenses. After 5 years, the rest of the mortgage balance will be discharged.

If you file any Bankruptcy, all your credit cards must be included.

Customer: replied 5 years ago.
Ok so if my husband has a car payment that is $635 and one that is $535. A Camper payment that is $386. A house payment that is $1000. Roughly our utilities are $400. He has two credit cards of his own which have a min payment of $205. Student loan that is $75. That is $3236. That is without payment to school for lunch, groceries, and gas for both of our cars. About how much could they take per month from us? our net income is $7000.00 and bring home is $5200.
Expert:  cfortunato replied 5 years ago.

You would have to subtract the other expenses - lunch, groceries, gas, etc. from the $5200 - in addition to subtracting the $3236 - to arrive at the amount you would have to pay.

So if you pay $1000 per month for food and gas, your monthly payment would be about $964.

Edited by cfortunato on 1/5/2011 at 4:16 AM EST
Customer: replied 5 years ago.
Do they lock in the decided payment plan and then leave you alone as long as you pay it or do they recalculate your income on a yearly basis?
Expert:  cfortunato replied 5 years ago.

If your income goes down, you can get a downward modification of the payment at any time.

You will also have to submit a copy of your tax return every year, and if your income has gone up, the trustee can adjust your payment upward.

Edited by cfortunato on 1/5/2011 at 4:58 AM EST