Question: We have a deficiency judgement against us for a home we were building in Arizona. Can the bank garnish my wages and/or lien the house in which we reside. We do not want to file BK?
Answer: – First off let’s clear up some misunderstanding on your deficiency judgment in Arizona. Arizona is actually a non deficiency state, however there are rules in order for the homeowner to apply the anti deficiency law. First is has to be a residential property on less than 2 1/2 acres. If you only have a first mortgage, chances are you may qualify. It’s the 2nd or HELOC that gives homeowners in Arizona all the problems. Usually a deficiency judgment in Arizona happens because of a HELOC since it is taken out after the 1st mortgage and it’s not a purchase money loan.
With this in mind, you need to determine what your situation is and if they have grounds to file a judgment against you based on what you’ve just read. If they can file a judgment against you than it’s best to try and work something out with the lender if you can. Usually you can make them an offer to pay it off in full or work out a payment plan. A lot of times homeowners don’t have a choice but to file bankruptcy because the lender simply won’t work with them and they can’t afford the payments or lump sum. But definitely try to settle with them if you can. If you do nothing, yes, they can garnish wages if it gets to that point.