Does Foreclosure Stop the Debt Collectors?

Absolutely not.  Foreclosure basically means you no longer own the property and the mortgage holder can sell the property in an attempt to recoup some of the losses from the defaulted mortgage.  In this real estate market, it is unlikely that the mortgage holder can get back the entire amount owed on the property.  In Florida they're lucky if they get back 50% of what was originally loaned against the property.  Do they eat the difference?  Yes and no.


There's something called a deficiency judgement.  A deficiency judgement is issued by the court against the individual(s) who defaulted on the loan.  The deficiency is the difference between the amount which the mortgage holder was able to sell the property and the outstanding balance plus any penalties, fees and expenses (i.e. - the cost of foreclosing) owed to the lender.  The deficiency judgement remains on file until the defaulting parties repay the deficiency.  How long does a deficiency judgement remain on your record?  For as long as it takes you to pay back the bank.  There's an interesting article in The Wall Street Journal about this very topic.

What's the better option?  Short sell.  With a short sale, the mortgage holder forgives the entire mortgage and can not come after you later.  This probably is leading you to more questions than answers.  Feel free to email me and I'll be happy to help.