Finance Troopers - Can the bank garnish my retired/disability pay for a foreclosure ?

UPDATE: Thank you all for your feedback and your service. Here is what I learned from the VA. NO. The bank/lender will be unable to receive/lien any unpaid money against a loan backed by the VA. Here is why: VA guarantees loan. If for any reason a home loan goes into default/short sale/foreclosure, the VA will pay that lender 25% of original purchase price. VA Loan Officer: STEP 1: Stop making your payment. Bank will not do anything to a loan that is current. After 3 missed payments, bank will begin to chase with you. Tell bank rep you stopped your allotment and why. Ignore subsequent phone calls. Bank will chase with VA. VA will call you to check the reasoning for missed payments. Explain your reason. At this point, VA will begin to work with bank on resolving the unpaid loan balance. Try to short sale first. You can enlist a real estate agent to assist in short sale but it may take awhile. Bank will most likely hire their own agent. STEP 2: If house does not sale, it will go into foreclosure. Bank will file a claim with VA to collect what you owe. (In my case, 25% of purchase price will more than cover what is owed). NOW - Before bank can collect that money from VA- they must sign a declaration that prohibits them from EVER coming after you for money not covered in reimbursement. They cannot garnish your Military retirement, disability, civilian salary nor initiate a lien on your current home (Also backed by VA). You are in the clear. STEP 3: Only damage to you is your ego/pride and your credit report. Finally - VA rep - (Lory-Ann) indicated that this is not a unique situation - WE ARE PROTECTED. She indicated that many vets with a foreclosure on their report has not hindered them in obtaining a new home under VA after 2 years as long as they continued to keep their bills current. As much as I hate to be "That Guy" and have this black mark on my otherwise great credit - I have no other option. Thanks to 3 failed property managers in Clarksville, TN (Fast Train, Top Flight, and Horizon) and apathetic tenants - this is the result, But, that's another matter. Fortunately, my retirement pensions and dream home in California are safe because of VA home guarantee.

If the bank that owns the note on your foreclosure gains a judgement against you through a court, then the bank may be able to put a lien against your checking or savings account. So while they’re not garnishing your pay, they may still be able to get to your money. Laws vary from state to state. It’s worth investigating. What usually happens though is that the bank will foreclose, sell the property, and report the difference between what you owe and what they make as income to you in the current year. You’ll have to pay the taxes on that money as ordinary income. If you attend the foreclosure hearing, you may be able to change the terms, but most people don’t even bother to show up.

Retirement, maybe... VA Disability (i'll have to double check this) but I believe is a hard NO.

That said, call the VA hotline. As much as I dislike dealing with the VHA (health side), I have never had a problem dealing with any PERSON in the VA. They are helpful and will answer questions about what can and cannot be garnished, and under what circumstances. When the economy imploded a few years back and I was exploring financial issues one of the finance guys spend 90 mins walking me through options.

http://military-law.lawyers.com/veterans-benefits/creditor-claims-on-your-va-benefits.html