When your mortgage company sells your home at auction for lower than what you owe, you may still be responsible for the difference. This deficiency can come back to haunt you in the form of a judgement.
A recent homeowner defaulted on his $200,000 mortgage. At the time of losing his home, he still owed $175,000. The bank sold the home at auction for $100,000 which left the former homeowner on the hook for the remaining $75,000. Subsequently, he had to file bankrupcy. "That was the one thing I was trying to avoid. If I would have known this was going to be the end result, I would have filed when I was served with my foreclosure papers. Maybe I'd still have my home."Once they have a judgment, they can pursue you anywhere. They can ask for financial records, have your wages garnished and, if you fail to respond, a judge can put you in jail.
With the skyrocketing numbers of foreclosures, more people will be plagued with deficiency judgements. Many people have no recourse but to file bankruptcy. So, starting over may not be as easy as first thought.