Wage Garnisments

[Kevin]

I have a recourse 2nd mortgage. I haven't missed a payment yet and was planning on missing my first payment that's due in 9 days. But now that it's down to the wire I'm freaking out. I have been looking around the internet and my lender (GreenTree) is known for being ruthless. Apparently calling your family and place of work and telling people you are not paying. Being very rude and abusive over the phone.

My #1 fear is them garnishing my wages. Does anybody know if they have to wave security before they can do that?

[The Professor]

Thankfully because of this thing called "due process" they would have to file a lawsuit and succeed in getting a judgment before they could exercise this sort of collection remedy.

Daniel

[Kevin]

Why aren't most second mortgages doing this? Is there a down side for them? For anyone walking who still has an income but wasn't doing a BK, this seems like the best way for them to milk some money out of you. Reading on here I haven't seen it happen and I wonder why. I'm really concerned in my situation cause a BK is going to be really hard for me. I NEED to walk and settle for a reasonable amount of money, if they hound me garnishing wages for years to come with added up fees, I could be paying these suckers off forever.

[The Professor]

The lenders won't. It is those companies they sell these second loans to at a deep discount that will chase borrowers. I can assure you that it will happen.

Daniel

[dealingwithHomeEq]

If your second is not purchase money in Arizona, then the lender has one of three options:

1. Sue on the note (to answer your question, they would have to waive the security to do this);

2. Bring a judicial action for foreclosure and, after the sale of the property, seek the remaining deficiency against you; or

3. Bring a non-judicial trustee sale (presuming that your second is a trust deed and not a mortgage).

I agree with the Professor--in order to garnish your wages, they have to get a judgment against you and then apply for a writ of garnishment.

But I have seen this done in less than 4 months if you do nothing. You can drag it out for much longer if you (1) dodge service of process, (2) answer the complaint once they eventually get an order from the court for abode service of process (service by posting the summons and complaint on your front door and mailing you a copy), (3) answer the complaint and make them move for summary judgment (the court fee to answer is $208 in Maricopa and $158 in Pima), and (4) oppose the writ of grarnishment.

Unfortunately, filing a chapter 7 will not enable you to remove (strip off) the lien, but it will allow you to discharge your personal liability under the note. You can strip it off in a Chapter 13, though.

In some cases, it may be better to wait and see if they sue you on the second, then they will have elected their remedy and waived the security in the home. You could then wipe that judgment out in a chapter 7.

[chefette]

All this talk of wage garnishment is a state by state issue, yes? I know that in Texas they cannot garnish wages or make your life miserable by phoning you day and night.

I intend to take the wait and see with my second. I am now 3 months behind on the 2nd and 2 months behind on my 1st. So far I have not heard a word from my 2nd. I strongly suspect they will sell it to a collection agency. But who knows? I only know they cannot take what I do not have.

[Enough Already]

I think Chefette is right. It all depends on your state laws. In FL they cannot garnish wages of the head of household. They can garnish wages of any other income earner, but the maximum they can garnish is 25% of the after tax pay.

What state are you in Kevin?

[trappedincali]

I am in a similar position where my second is recourse. I know they will charge it off eventually and come after me for the debt. My plan is to communicate with the new owner of the debt and attempt to come to an agreement on lump sum settlement or reduction of debt/payment plan. This will be well documented and all communications sent certified. If they give me grief, I will hire a collections attorney to assist. This way, if it comes down to an attempt to garnish my wages, I can show up in court with proof of my attempts to resolve the matter.

-Lee

[Enough Already]

Sounds like a good plan, Trapped. We plan to save up and be ready to negotiate a settlement too. From everything I've ready the debt can likely be settled for about 10%. Got my fingers crossed.

[nogero1]

Curious as to how any of your situations have turned out since several of months have now passed? Please update us if you can.

[Enough Already]

Nogero1,

I don't have much of an update yet. It's been 6 months since I stopped paying my mortgage, and they still haven't filed the NOD. We were just waiting, and waiting. As of about 2 weeks ago we decided to try for a short sale, so we'll see. If the short sale doesn't go through we still plan to settle the debt after the foreclosure.

[nogero1]

Enough,

Thanks. I'd say that it's been 6 months and no NOD is quite an update! That's taking a really long time. Are they harassing you much? Best of luck from here on out. Please post here with updates if you don't mind.

[dogatemy]

Originally Posted by Kevin

Why aren't most second mortgages doing this? Is there a down side for them? For anyone walking who still has an income but wasn't doing a BK, this seems like the best way for them to milk some money out of you.

My attorney indicated they will *eventually* go down this path but it takes a long time and is usually a process of last resort.

The reason is because most people who have their wages garnished will either quit their job or file for bankruptcy. There seems to be a psychological stigma about the banks reaching their hands directly into your bank account and taking 25% of every check. The idea of a creditor going through all the hassle of filing a lawsuit, getting a judgment, posting a bond, doing an asset search, hoping you have enough money to justify all the legal cost, having the sheriff serve your place of employment only to find out you quit or file for bankruptcy soon afterwords tends to be an expensive resolution.

I personally have begun moving all of my assets and every dime I can manage into my 401k, IRA and other exempt assets with the expectation that I will need to leave my job and file for bankruptcy in the future.

[Enough Already]

Nogero,

Yes, 6 months without a NOD seems great! Although, I found out from reading the forum over the past 8 months or so, that it's actually not that uncommon. I have an 80/20 loan, both with Chase. Here's a link to my story: Walking Away in FL - Recourse State

Here's a link to another interesting thread about the length of time people are waiting for their NOD's & foreclosures: How long between first missed payment and foreclosure?

Good luck to you, and please keep us posted!

[Enough Already]

PS: Good point, Dog. I think they would have to go through a lot of trouble and expense to garnish wages, but you never know. It's best to cover yourself in every way possible.