How can I protect my inheritance from foreclosure?

If you’re facing foreclosure and worry that a foreclosure deficiency will give the lender cause to come after your inheritance, your state may provide a way to protect your money before the lender sues. Money you deposit in an Individual Retirement Account (IRA) is often exempt from seizure by creditors.

What happens if you inherit a property in foreclosure?

If the mortgage is not paid, the property may be sold at auction. Any time before the foreclosure has been filed, or even once a foreclosure case has been filed, a beneficiary can request a “payoff letter,” meaning they may reinstate the mortgage payments from the mortgage company.

How does a bank get money back from a foreclosure?

When a lender repossesses your home, the bank will then begin the process of selling it to an interested buyer. This happens in one of two ways: Via a foreclosure auction. By listing the home with a real estate agent. Either way, the lender will set a price that allows them to recoup the remaining balance of the loan.

Can a bank attach money to an inheritance?

While some forms of income, such as federal and state benefits, are exempt from attachment, your inheritance is not. If you inherited money from your parents or sold inherited items and deposited the cash into your bank account, your former mortgage lender can attach it via a bank levy.

What happens if you owe the bank money after a foreclosure?

Suppose you owed $300,000 on your mortgage loan, including foreclosure fees and costs, and your home sold for $275,000 at a foreclosure sale. The deficiency is $25,000 ($300,000 – $275,000 = $25,000). In some states, the lender can seek a personal judgment, called a “deficiency judgment,” against the borrower to recover the deficiency.