What are my financials obligation in a shot sale?

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What are my financials obligation in a shot sale?

I bought a condo 10 years ago. When the market crashed my job was cut from full-time with benefits to part-time with no benefits. I had to move out of state and started renting out my condo, which I’ve done for 10 years now. My current renter is leaving but the unit is in such bad shape that I can no longer rent it without repairs. Unfortunately, my current income $21,000/year social security is $18,000 part-time job allows no room for such repairs. I am 64 1/2 years old. I have very limited retirement funds. I currently owe approximately $168,000 on the mortgage but the current market value, without repairs, is probably $145,000-$150,000. If I go for a short sale, can the bank garnish wages or collect on my retirement accounts for any reason? I am currently renting and living in a small apartment in another state. I have never missed a mortgage payment on the VA condo, however I will no longer be able to make payments because of not being able to find a new renter who will take it in its current condition.

Asked on October 8, 2018 under Real Estate Law, Virginia

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

If the lender agrees to the short sale and that it discharges or wipes out or satisfies your obligations, then you will owe nothing. 
If you sell short without lender approval, you will owe the balance of the loan to them (which is why it's a good idea to talk to your lender and see if they will approve the sale). Social security cannot be garnished; nor can retirement accounts (e.g. IRAs, 401(k)s, etc.) However, wages from a part-time job can be garnished, so if you work part-time, they could go after that money, but not your SS or anything in a quallified retirement account.


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