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WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 17252
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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We were in the process of a short sale three months ago, and

Resolved Question:

We were in the process of a short sale three months ago, and stopped paying our second mortgage while it was in negotiation. The short sale fell through, and we were left with a foreclosure and a second mortgage of $17,000, which was a line of credit used to update the home. I just contacted Green Tree, the debt collector for the outstanding balance and they said the account has been "charged off" and depending on the state, if an amount agreed upon ($900) is not received by a given date (11/20), that our wages could be garnished, or our accounts attached. My question is, in the state of California, is this something that can or cannot happen? What other options do we have, if any?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  WALLSTREETESQ replied 5 years ago.

WALLSTREETESQ :

Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati on.

WALLSTREETESQ :

In CA, the law only protects from lawsuits and collections from purchase money loans,

WALLSTREETESQ :

so if the second loan was not used to purchase the home, they can receive a judgment and start garnishing your wages,

WALLSTREETESQ :

If you file a bankruptcy the debt would be discharged, and they would not be able to come after you,

Customer:

So they CAN garnish our wages if we do not pay what they are asking for?

WALLSTREETESQ :

California Code of Civil Procedure Section 580(b).


The code states in relevant part:


"No deficiency judgment shall lie in any event after a sale of real property or an estate for years therein for failure of the purchaser to complete his or her contract of sale, or under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price of that real property or estate for years therein, or under a deed of trust or mortgage on a dwelling for
not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling occupied, entirely or in part, by the purchaser."


 

WALLSTREETESQ :

Yes,

WALLSTREETESQ :

only the second line of credit,

WALLSTREETESQ :

if the loan was taken out to buy the home, than they would not be able to come after you,

WALLSTREETESQ :

but in the case you have mentioned, they have that legal right

Customer:

Thank you.

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