How to avoid a deficiency judgment?

I lost my job and took one in a neighboring state at half the pay. I owe $280,000 on a house worth about $235,000. I have about $500,000 liquid and about $225,000 in a retirement account. Is it foolish to think I could do a short sale or strategic default because the lender would see my bank statements and seek deficiency judgement?

Asked on October 13, 2011 under Real Estate Law, Georgia

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If you want to do a short sale on your property, you first need to ascertain whether or not the loan that is on the property that you owe $280,000 on is a "purchase money" loan or not and if your state has anti-deficiency laws prohibiting deficiency judgments where the loan is purchase money.

If your loan is a "purchase money" loan, and your state has anti-deficiency laws, then you should not have any obligation on your home's loan if it goes into foreclosure or you do a short sale.

Given your situation it is best that you consult with a real estate attorney to confirm the status of your loan and your state's laws on "anti-deficiency".

Good luck.

 


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