Ignoring a foreclosure lawsuit can have devastating consequences. Although many people operate under the idea that the foreclosing lender cannot take anything other than the house from the defaulted borrower, this is absolutely NOT the case and those individuals who walk away or ignore a foreclosure can be in for a rude awakening.
If you ignore a foreclosure lawsuit, eventually the court will auction your house to the highest bidder, which will, in almost all cases, be the lender who holds the mortgage on the property. Once the lender has title to the property, they will take immediate steps to sell the property, as banks are not in the business of holding onto real estate. This is where the problems arise. When the lender sells the property to another individual, usually it is for less money than the original borrower owed the bank in the first place. The foreclosed party, or original owner, will be personally responsible for the difference between what was owed to the lender and the amount the lender received when the property was re-sold to the new buyer. As such, two consequences may arise:
1. Default Judgment – As mentioned above, the foreclosed party, or original owner, will be personally responsible for the difference between what was owed to the lender and the amount the lender received when the property was re-sold to the new buyer. If the lender obtains a judgment against the foreclosed party, they can then proceed with the following:
* Garnishment of wages
* Pursuit of any available assets
* Levy bank accounts
2. Severe Tax Consequences – Once the lender has received less than originally owed on the mortgage, the IRS will be notified and the foreclosed party may be responsible for substantial tax consequences.
As a result of the serious consequences associated with ignoring a foreclosure, it is never advisable to simply walk away. An attorney from our law firm can meet with you to discuss how to protect yourself in the event you find yourself facing foreclosure, even when you have no interest in saving the property.