Can Foreclosure Result In Garnishment Of Injury Settlement?

By Author: Edward Baxter
Total Articles: 3
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Whether or not foreclosure is going to result in garnishment of the injury settlement that you had received will depend on the federal law for the states with regards to mortgage debt and foreclosure. It is not only the simple debt laws, but the laws with regard to foreclosure too that varies from one state to another. You need to be aware of all kinds of laws in relation to debt so as to save yourself form the complexities of the court and save your money.
Foreclosure and garnishment of injury settlement
If you fall behind on your mortgage payments, the lender has the capacity to foreclose your home in order to get back the money which you had borrowed from him in order to finance your home. So, it is extremely important for you to go on making the mortgage payments at any cost. Now, it can happen that the value of your home has lowered a lot and the lender won’t be able to get back the money he had given to you in the form of the mortgage. In such a situation what can the lender do?
This will depend on the mortgage debt laws of the state ...
... you are in. On this law will depend the issue of garnishment of your injury settlement. In some states, the federal law allows the lender to sue you for the deficit amount if you fail to pay off that amount. In some other states, the federal law does not allow the lender to sue the debtor over the deficit amount. So, if you are in a state where the lender has the ability to sue you over the deficit amount, your injury settlement amount can get sued. This is because, though the federal law mentions that the alimony payments and the child support payments cannot be garnished for any purpose by the creditors or the lender, the injury settlements are not protected by the law.
However, though the federal law on the general basis does not protect the injury settlements from the legal complexities of the creditors and the lenders, you may be able to save your injury settlement amount on the basis of the state laws. There are several laws designed by the states which may help you save the injury settlement. Like, in the state of Florida, the law allows debtors to protect the settlement assets by including those in a structured settlement annuity. But again, the state of Minnesota, the injury settlement is in no way exempt from garnishment.