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MShore, Attorney
Category: Legal
Satisfied Customers: 25285
Experience:  Negotiate, Draft, and Review many complex commercial agreements each year.
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What are legal consequences of returning collateral to secure

Customer Question

What are legal consequences of returning collateral to secure a loan for a purchase? Boat: Paid $75000. Loan amount currently $70000. Current Value $35000. Also purchased a time share for $33000. Owe $27000. Value $15000.
Have owned both for about 2 yrs. I know there will be a credit hit (Current FICO is 750+) Im retiring in 2 yrs and feel because of the market and current value should give them back to the lender. I understand California and Arizona are a no deficiency this true?
Submitted: 7 years ago.
Category: Legal
Expert:  MShore replied 7 years ago.
Thank you for the post, do you reside in Arizona or California?
Customer: replied 7 years ago.
I live in California Boat is slipped in california. time share is in Hawaii
Expert:  MShore replied 7 years ago.
Thank you, XXXXX XXXXX non-deficiency state with respect to foreclosure on a primary residence. However, this protection does not apply to moneytary judgements. The Exempt Income Protection Act would govern each creditor's ability to collect on the deficiency between what is owed and the current value of the property. Under the EIPA your bank account cannot be frozen if the balance is less than:

$2,500 - if your account contains directly deposited exempt benefits, including Social Security, SSI, Veterans benefits, disability, pensions, child support, spousal maintenance, workers compensation, unemployment insurance, Public Assistance, Railroad Retirement benefits, and Black Lung benefits; or $1740 in all other accounts.

Additionally, the following are exempt:
  • Public Assistance (PA)
  • Supplemental Security Income (SSI)
  • Social Security
  • Social Security Disability (SSD)
  • Veterans benefits (VA)
  • Child Support
  • Spousal Maintenance
  • Workers Compensation
  • Unemployment Insurance
  • Railroad Retirement benefits
  • Black Lung benefits

MShore and 6 other Legal Specialists are ready to help you
Customer: replied 7 years ago.
So essentially, if either lender chooses to pursue any deficiency and I have income/assets they can go after, Im on the hook for any deficiency through judgement, attachment of income or otherwise?
Expert:  MShore replied 7 years ago.
Correct, unfortunately.