Thanh N
01.08.14 01:47 AM Comment(s)

Marylanders know that sometimes taking a loan is not only an option but a necessity. A house may be held as collateral for the loan, and if debts become unmanageable, a homeowner may be forced into foreclosure. However, sometimes debt collectors will pursue the former homeowner even after a property foreclosure.

A couple living in Frederick County recently faced this situation several years ago when they allowed a second home they owned to go into foreclosure. The foreclosure sale of their Emmitsburg house did not satisfy the mortgage debt. The couple assumed that the foreclosure had handled the debt so they moved on with their lives, but soon after, a third-party debt collector started hounding them for payment of $51,000.

Many people are shocked when faced with similar situations because they may be unaware that foreclosure does not stop responsibility for a deficiency. If the house is sold for less than what is owed to the bank, the sale proceeds do not cover debts associated with the house, so the legal borrowers are responsible for the deficiency.

A Maryland Bankers Association official stated that these kinds of collections are done when the bank is aware that the borrower has assets to repay the excess amounts. When a deficiency judgment is filed, the bank can garnish wages and go after other assets. In certain cases, the bank may wait until the debtor has a source of income to repay the balance. Older Maryland banking policy allowed for banks to pursue debts up to 12 years, but recently Maryland lawmakers changed it to three years.

Refinancing loan terms with the lenders, filing for bankruptcy under Chapter 13 or conveying the property back to the lender are some of the options available to a person faced with debts. A professional may be consulted when faced with these situations to understand the various processes and their effects on the borrower’s income, savings and credit.

Source:, “I-Team: Many can still owe on homes after foreclosure,” Lisa Robinson, July 25, 2014