Can your retirement funds be taken in a foreclosure?6 years ago - 7 answers
No, during the foreclosure process, only the house used as collateral can be taken by the bank. Since you pledged the property as collateral for the loan, the lender will sue for the forced sale of that home to pay off the loan.
In terms of a deficiency judgment after foreclosure, the bank may be able to go after other assets, but your retirement funds are generally protected. If you have an IRA or 401(k) or 403(b) or similar program, then the bank can not try to seize it. If your retirement funds are invested in a second home or a prize race horse, then the bank may be able to to go after those other assets.
However, banks rarely go after deficiency judgments. They know that people in foreclosure do not have the money to pay the mortgage payment, let alone pay the entire foreclosure judgment or a deficiency judgment after foreclosure. It's just not worth their time to keep suing you without ever collecting anything from it.
The only institutions going after your retirement funds are the banks and government, which are inflating the money supply, manipulating the interest rates, and generally making your retirement funds worth less right now. You can't make them stop that, unfortunately, but you can rest assured that the banks and government can't go after your retirement funds directly, even in the case of foreclosure.
No - your house is taken.by src50 - 6 years ago
except that any transaction with the preceding few months of your BK filing can be questioned by the court and recalled if deemed to have been a "transfer in bankruptcy" [which usually means the debtor was already bankrupt and the transfer gave some advantage either to the debtor or to a selected creditor over other creditors of the same class].
So, you can't hide assets inside your retirement plan to evade your creditors.
of course there could be the very odd additional exception .. an example might be when fraud or another crime was committed to get the funds to put into the retirement plan.
Source(s)by Spock (rhp) - 6 years ago
No, foreclosure has to do with the lender taking possession of your house.
If, after sale of the house, the lender doesn't get everything you owe them, they may, under some circumstances, also be able to sue you for the balance. If that were to happen, you would need to pay the judgement somehow. But nobody will directly take your retirement funds.
Only if you and the lender agreed to use your retirement fund as collateral for the mortgage note. Most likely you used the property or deed as collateral, and that is what they will take.by 14U2NV - 6 years ago
No, you will still have a loan to pay though...
Why don't you work with your lender, it's the responsible thing to do when you've made a commitment like buying a home.
I can guarantee that you stand to lose much more by "walking away" from your obligation then you do waiting for the value to recover like any other adult.
Call a loss mitigation company to help you, a good one is Robert at Monster 562.645.7480!
Foreclosure law varies from state to state. In some states, the lender can only recover the property; in others, the lender can get a deficiency judgment if the house sells at auction for less than what is owed on it (in today's market, that is a distinct possibility). That means the debtor could lose the house and still owe the lender tens of thousands of dollars in unrecovered principal, interest, and foreclosure-related costs.
As a part of the process for obtaining the judgment the debtor can be subjected to a "debtor's conference". In some states a person being questioned in a debtor's conference is not entitled to have an attorney present and if they lie, it's considered perjury.
My understanding is that the lender cannot attach/garnish retirement funds (pensions, 401Ks, IRAs, etc.); however, they can attach/garnish wages and bank accounts (checking and savings) and lien any real property (real estate) the debtor owns -- even property purchased after the foreclosure and in other states (all they have to do is get a "sister-state judgment"). I have also heard that there have been instances where lenders have been successful in garnishing investments accounts.
In the state where I live, judgments "automatically" attach to any real property the judgment debtor owns. That means that a person with a judgment can buy property years after the judgment is issued and may not know the lien has attached until they go to sell the property.
Judgments become a matter of public record and will show up on the debtor's credit report, along with the foreclosure. In the state where I live judgments are good for ten years and can be easily renewed for additional ten-year periods so the judgment could remain on a credit report long after the foreclosure drops off.
If a lender gets a deficiency judgment, they can be very aggressive in collecting the money and people are often forced to file for bankruptcy or sell other property and liquidate other assets to pay them off.
If you are facing a foreclosure you need to understand what the law in your state allows.