Question.   My name is (name withheld) and I allowed myself to write to you after hours spent on the real estate blogs. We sold our house in Lake Stevens, WA in November 2008 in a short sale. My husband acted on my behalf and signed a promissory note with second lender for $8600, with payments of almost 75 dollars. My husband signed a note because we were informed by our broker and a Escrow Company, that this note will stay in our file (whatever it means), until we purchase our next home, and then the second lender can go after assets from our new home. We understood that we will not be personally liable for this note, so even after a  judgment my husband’s wages cannot be garnished. We cannot find any info about that on any blog, so we would really appreciate any thought.

Also, our note was sold to collection agency. We try to talk to them and explain we can  afford  only 50 dollars payments per month, however the collection agency said they would take $50, but would report it on our credit as a late payments.
We are upset mostly with the incompetence of our broker and escrow company, who convinced us to sign this promissory  after they just came back from some kind of a weekend class.
Please,  excuse  our intrusion.
We hope to hear from you soon.
Best Regards,
(Names withheld here)

Answer.   I’ll share a few thoughts about the law on promissory notes and your obligations, but I don’t know all the facts of your case, and I have not seen your documents.   I am retired from law practice, so what I do share is not rendering a legal opinion, and I would recommend you see an attorney to address the legal issues and your financial obligations.   I will talk generally about notes and the obligation on notes.

When you sign a promissory note, you are personally obligated on that note under the specific terms of that note, which in your case apparently was $75 per month.   According to the terms of most standard notes, if you do not make the monthly payment, you are in default.   The company that holds the note and to whom you are obligated to make payments could sue you and obtain a judgment in court if you are in default.   With that judgment they could enforce their legal right by attaching your assets (those not exempt) and garnishing your wages.

If you sign a promissory note, you are obligated, and it doesn’t matter where they put the note (in a file, in a drawer), the note is still a legal obligation that they can enforce against you.

I know that probably doesn’t alleviate your difficulties, but I hope this information is helpful.

Chuck E. Marunde, J.D.

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