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Ely
Ely, Counselor at Law
Category: Real Estate Law
Satisfied Customers: 86599
Experience:  Qualified attorney in private practice including business, family, criminal, and real estate issues.
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If a referee grants a deficiency order against a debtor at

Resolved Question:

If a referee grants a deficiency order against a debtor at the conclusion of a foreclosure proceeding, does South Carolina law allow the debtor's wages to be garnished for the deficiency debt?

If the answer is no, may the lender garnish wages of the debtor in another state to which the debtor may later move?

If a lender agrees to a short sale in lieu of foreclosure, may the lender seek a judgment against the debtor for the deficiency?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Ely replied 1 year ago.
Hello friend. My name is XXXXX XXXXX welcome to JustAnswer. Please note: (1) this is general information only, not legal advice, and, (2) there may be a slight delay between your follow ups and my replies.

Can you please clarify something - has anything actually happened yet - has the lender foreclosed, or, not yet?

This is not an answer, but an Information Request. I need this information to answer your question. Please reply, so I can answer your question. Thank you in advance.
Customer: replied 1 year ago.

Citibank has approved the property for a short sale and a new buyer has been found. A second lien holder for a home equity loan has not agreed to a short sale and Citi has perfected its forclosure path. Foreclosure is set for June 3rd unless the two banks can agree to short sale terms. In the mean time, the potential purchasers are getting tired of the wait.


 


My ex-son-in-law has moved out of state and left my daughter to handle things with her own meager funds. She has no real assets other than a small savings account, but she has a steady job, hence the garnishment questons.

Expert:  Ely replied 1 year ago.
Thank you, friend. I appreciate that clarification.

If a referee grants a deficiency order against a debtor at the conclusion of a foreclosure proceeding, does South Carolina law allow the debtor's wages to be garnished for the deficiency debt?

The answer is yes, I am afraid. Rather, it is not that simple. At the end of a foreclosure, if there is a difference between the amount the property sold for and the mortgage outstanding, the deficiency is automatically an option for the lender to pursue. However, they MAY or MAY NOT pursue it. They would have one year to exercise the option of pursuing the deficiency in a separate suit.

IF they do (many lenders do not, as they see it a waste of time), then if they get judgment, it may be enforced just like any other judgment, which means up to 25% of net pay garnished per check.

If the answer is no, may the lender garnish wages of the debtor in another state to which the debtor may later move?

Well, as you see, they CAN. But they can garnish for judgment in almost any state, but generally no more than 25% of the net.

If a lender agrees to a short sale in lieu of foreclosure, may the lender seek a judgment against the debtor for the deficiency?

Yes, they can, and in a SHORT SALE, the former owner is always EXPECTED by the lender to pay the deficiency, wherein in a foreclosure, this is something that the lender may or may not choose.

I hope this helps and clarifies.

Please note: I aim to give you genuine information and not necessarily to tell you only what you wish to hear. Please, rate me on the quality of my information and do not punish me for my honesty. I understand that hearing things less than optimal is not easy, and I empathize, but the last thing I wish to do is mislead you.

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Customer: replied 1 year ago.

Using the Internet for info like this is so confusing. One site says South Carolina is not a "no recourse" state but South Carolina law will not allow garnishment as a collection method for a deficiency. A second site lists South Carolina as a "no recourse" state for foreclosures. Your answer is a third different answer.


Are you fami

Customer: replied 1 year ago.

Using the Internet for info like this is so confusing. One site says South Carolina is not a "no recourse" state but South Carolina law will not allow garnishment as a collection method for a deficiency. A second site lists South Carolina as a "no recourse" state for foreclosures. Your answer is a third different answer.


May I ask whether you are familiar with these specific laws in South Carolina so that I may use your research to make other non-legal decisions such as domicile relocation; or, are you giving a general nationwide answer? I mean you no offense, but this is the first pay site I've used for this problem.

Expert:  Ely replied 1 year ago.
John,

Your question was cut off after "Are you fami..."

But I believe that you meant to state am I familiar with SC.

Yes.

Understand that judgment, and enforcing a judgment are two different things.

Just because a judgment may be not enforceable by garnishment does not mean that someone cannot get judgment. They can always SUE - they may simply not be able to enforce it.

GARNISHMENT
South Carolina does indeed afford a lot of protection against creditor judgments. Under SECTION 37-5-104, it states:

"With respect to a debt arising from a consumer credit sale, a consumer lease, a consumer loan, or a consumer rental-purchase agreement, regardless of where made, the creditor may not attach unpaid earnings of the debtor by garnishment or like proceedings."

However, this leaves plenty of caveats. Garnishment is only denied to judgment arising from consumer credit sale, a consumer loan, or a consumer rental-purchase agreement. If there is a SHORT SALE, this short sale deficiency judgment may still arguably be garnishable. With a foreclosure judgment deficiency, not so much, and her wages may be exempt.

This is because a short sale is arguably NOT a consumer credit sale, a consumer loan, or a consumer rental-purchase agreement situation anymore. Wherein, a foreclosure can be.

Keep in mind, this is not an objective matter, and law is subjective.

FORECLOSURE
I am not sire what material you are reviewing, but lenders in SC do have the ability to pursue deficiency. S.C. Code Ann. §29-3-660

See here.

ALTERNATIVES TO GARNISHMENT
Finally, note that even without garnishment, a judgment creditor can enforce judgment other ways, such as:

1) levy of a bank account;
2) attachment and sale of non-exempt property.

But, much is exempt from these actions:

Personal property which may be exempt may include the debtor's interest in one motor vehicle not to exceed $1,200 in value; household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal, family, or household use, not to exceed $2,500 in aggregate value; jewelry not to exceed $500 in aggregate value; cash and other liquid assets to the extent of a value not exceeding $1,000 except that this exemption is available only to an individual who does not claim a homestead exemption; implements, professional books, or tools of the trade not to exceed $750 in aggregate value; any unmatured life insurance contract owned by the debtor, other than a credit life insurance contract; professionally prescribed health aids; social security benefits, unemployment compensation, public assistance benefit, veteran's benefit, disability, illness or unemployment benefit, alimony, support or separate maintenance; a payment under a qualified stock bonus, pension, profit sharing, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, property that is traceable to award under a crime victim's reparation law, a payment on account of the bodily injury of the debtor or of the wrongful death or bodily injury of another individual of whom the debtor was or is a dependent and a payment under a life insurance contract that insured the life of an individual of whom the debtor was a dependent on the date of that individual's death, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor. (15-41-30(2).)*

* http://www.judgmentenforcementagency.net/

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Ely, Counselor at Law
Category: Real Estate Law
Satisfied Customers: 86599
Experience: Qualified attorney in private practice including business, family, criminal, and real estate issues.
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