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I am hearing far longer time-frames to obtain deficiency judgments than 6 months. I guess each state has it's own limits. What I do know are the exceptions to the 2009 Debt Relief Act. If you,
bought the home w/ refinance proceeds from another property....
did a cash out refi.......
or put a heloc on the home after purchase to buy *stuff*.... (that's over 54% of homeowners)
purchase price was more than 2M
or the home is not your primary residence, you can look forward to a 1099 or a deficiency judgment. A deficiency judgment is debt owed and sanctioned by the court for collection. The plantiff can seek collection via garnishment of pay. (some states allow for seizure of assets). But, a judgment is the least of your potential problems. It's the 1099 you should be afraid of.
If a 1099 is issued, then your troubles are with the IRS. This is quickly becoming the preferred method, the banks can take an immediate "loss" to offset income. A former homeowner being faced with paying taxes on a sudden 50K that you really didn't earn can be more than problematic. The IRS seizes assets and asks questions later. An IRS lien is there for life or until it's paid in full. It never expires. Tax liens can never be included in a bankruptcy, the same for any federal debt.
My biggest fear is so many will be seriously caught off guard, thinking their life is finally getting back on track, only to find out about a lien in the rudest possible way. Think about it, how many leave a forwarding address in a foreclosure? Not very many. The only way for the IRS to track anyone is through the social security number - and then they got you.
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