States That Garnish

• The majority of U.S. states permit creditors to garnish your paychecks. As of 2011, 46 states have garnishment provisions in place for creditors who cannot procure voluntary payments from debtors. Only four states, North Carolina, South Carolina, Texas and Pennsylvania, do not allow commercial creditors, such as mortgage company, to garnish a debtor's wages. All other states allow wage garnishment.
  
  

Foreclosure Debt

• Wage garnishment after foreclosure is not a certainty for every borrower who loses his home. Banks sell foreclosed properties either at auction or through a realty company. If your former home sells for more money than you owed on your mortgage loan, you do not owe a mortgage deficiency to the bank. If you no longer owe the lender money, it has no reason to sue you and file for a wage garnishment -- regardless of where you live.
  
  

Non-recourse States

• Just because your state allows wage garnishment, that does not mean your lender has the legal right to garnish your pay following a foreclosure. Some states, such as California, have laws in place that require mortgage lenders to accept a home as payment in full during a foreclosure. Even if the bank cannot recover what you owe through the property sale, non-recourse state laws prevent it from pursuing you for the debt. If your lender cannot legally demand that you pay off the deficiency, it cannot garnish your wages.
  
  

Requirements for Garnishment

• A mortgage company cannot simply demand that your employer turn over a portion of your earnings each pay period. It must obtain a writ of garnishment through the court before seizing your wages. Creditors need a civil judgment to obtain a writ of garnishment. Judges award creditors a civil judgment following a successful collection lawsuit. Only the federal government is exempt from this requirement. Thus, if your former mortgage lender wishes to garnish your wages, it must file and win a lawsuit against you. Depending on your mortgage company's policies and how much you owe, a lawsuit may prove too time-consuming and expensive to benefit the bank. Without a civil judgment, however, your former lender cannot garnish your wages -- regardless of which state you live in.