If I am short selling my home, can my lender try to go after a personal injury settlement thatI was recently awarded?

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If I am short selling my home, can my lender try to go after a personal injury settlement thatI was recently awarded?

Can it legally touch that money that was awarded to me for injuries, since that the money is non-taxable?

Asked on August 8, 2011 New York

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

First of all, see if you can get your lender to agree to waive any rights that it may have to a "deficiency" (i.e. the difference between what your house is sold for and the remaining balance of the mortgage, plus costs). If it will (and lenders sometimes do) you need not worry about any later collection activity. If it will not agree to waive its right, then any of your non-exempt assets are at risk. And typically, a personal injury assets is not exempt. In other words, your lender can in fact do after your award (even if its non-taxable).

At this point, you should consult with an attorney as to what, if anything, can be done to legally protect this money.


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