Can a Second Mortgage Lender Garnish Your Wages? What Happens If You Default in California
Falling behind on a second mortgage can lead to financial stress that feels overwhelming, especially when you’re not sure how far a lender can go to collect what you owe. Many California homeowners assume the biggest risk is foreclosure, but junior lienholders often have broader collection options when a property lacks equity.
If a second mortgage lender cannot recover what they are owed through the home itself, they may pursue a lawsuit, seek a money judgment, and attempt wage garnishment. At Wadhwani & Shanfeld, our Los Angeles second mortgage lawyers help homeowners understand these risks and explore legal protections before collection efforts go too far. Knowing how these steps work and how bankruptcy can interrupt them can help you protect your income and regain control of your financial future.
How Second Mortgage Default Creates Personal Liability Risks
Missed payments on a second mortgage, HELOC, or home equity loan force a lender to decide how best to recover the debt. Because second-position lenders must pay off the first mortgage to foreclose, foreclosure is not always financially worthwhile. Homeowners struggling with rising interest rates, declining home equity, or a property that is underwater often discover that a junior lender is more likely to file a lawsuit than foreclose.
If the loan originated as a standalone second mortgage or home equity loan with clear personal liability provisions, the lender can sue to collect the balance. Once the court enters a money judgment, the lender gains access to additional collection tools. This possibility often surprises homeowners who believed a drop in property value shielded them from personal liability. In California, the type of loan and how it was structured matters, and personal liability often survives even when foreclosure would not produce any recovery.
When Can a Second Mortgage Lender Garnish Your Wages?
A second mortgage lender cannot garnish your wages simply because you fell behind on payments. Wage garnishment becomes an option only after the lender files a lawsuit, wins, and obtains a court judgment against you.
Once a judgment is in place, the lender may ask the court for a wage garnishment order. Under California Code of Civil Procedure § 706.050, only a portion of your disposable earnings can be garnished, but even a limited garnishment can strain an already tight budget. For homeowners dealing with high-risk financial situations or multiple debt obligations, losing part of each paycheck can make it almost impossible to keep up.
This process takes time and comes with notice requirements, but ignoring early communication or lawsuit warnings can make garnishment harder to stop later. Understanding when garnishment becomes a risk helps you act early, negotiate from a position of strength, or explore legal protections before a judgment is entered.
How California Law Shapes Collection Efforts After Default
California’s foreclosure structure and lien priority rules heavily influence how second mortgage lenders respond to delinquency. Because California uses a nonjudicial foreclosure system, second-position lenders often recover little or nothing if they attempt to foreclose on an underwater property. Litigation becomes a strategic alternative when a lender believes the borrower has income or assets that could satisfy a judgment.
A judgment opens the door to enforcement options, including wage garnishment, bank levies, and judgment liens. Under California Code of Civil Procedure § 697.310, a lender can record a judgment lien on real property you own in the county, attaching the debt to other assets beyond the home securing the original loan. These liens often “sit and wait” until you sell, refinance, or transfer title, forcing payment at that point.
For homeowners facing complicated lien structures or declining home equity, the shift from mortgage default to personal liability can feel unexpected. That is why it is important to understand how second mortgage lenders analyze risk and how California law allows them to pursue repayment.
How Bankruptcy Interrupts or Prevents Wage Garnishment
If a second mortgage lender has threatened a lawsuit or obtained a judgment, bankruptcy may provide crucial protection. Filing for bankruptcy triggers the automatic stay, which immediately stops wage garnishment, collection calls, bank levies, and ongoing lawsuits. For homeowners experiencing severe financial pressure, this pause can bring immediate relief and give you time to consider long-term options.
In a Chapter 13 bankruptcy, second mortgage arrears can often be reorganized into a manageable repayment plan. If the second mortgage is entirely unsecured because the home is underwater, it may qualify for lien stripping, removing its secured status and sometimes eliminating it through the plan. In Chapter 7, depending on how the loan is classified, personal liability for certain types of second mortgage deficiencies may be discharged.
These tools exist to help homeowners restore financial stability and protect essential income. Bankruptcy is not a failure; it is a safeguard designed to prevent aggressive collection efforts from derailing your long-term financial health.
Why Legal Guidance Matters Before Collection Escalates
The window between missed payments and formal collection activity is an opportunity to make informed decisions. Lenders have different approaches to delinquency, and you may have more room to negotiate than you expect. Whether you are facing HELOC delinquency, underwater mortgage concerns, or lender communication issues, early legal guidance helps you understand your rights and avoid missteps that make litigation or wage garnishment more likely.
An attorney can evaluate your loan documents, assess your liability under California foreclosure laws, and guide you through realistic repayment strategies or bankruptcy protections that keep your income and property as secure as possible.
Contact Wadhwani & Shanfeld
When second mortgage debt threatens your peace of mind or puts your income at risk, Wadhwani & Shanfeld is here to help you regain clarity. By speaking with our dedicated team of second mortgage lawyers in Los Angeles, you can understand your options, reduce the pressure from lenders, and take meaningful steps toward long-term financial stability.
Call us today to discuss your situation and learn how we can help you move forward with confidence.
Sources:
- California Courts – Wage Garnishment Overview
- Federal Trade Commission – Trouble Paying Your Mortgage or Facing Foreclosure?
- California Legislative Information – CCP § 706.050 (Wage Garnishment Limits)
- California Legislative Information – CCP § 697.310 (Judgment Liens on Real Property)
