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TESS VIGELAND: Better than last month, but worse than last year. That's the latest word on foreclosure rates from RealtyTrac. There were fewer foreclosures in January than in December, but they were still far higher than the same time last year. And the company estimates as many as 3.5 million more are on the way. Many home owners are tempted to walk away, or sell the house for less than they owe, and be done with it.

But as Marketplace's Jeff Tyler reports, that debt could haunt you for years to come.

Jeff Tyler: In Fort Collins, Colo., retired Navy lieutenant commander James Poole is going through his second foreclosure. This time, as a renter.

James Poole: The house has been sold in foreclosure, and we were waiting for the bank to tell us when they want us to leave.

Poole lost his own home to foreclosure years earlier. When the auction didn't cover the amount owed on the mortgage, the lender came after him for the difference. That's what's known as the "deficiency." In his case, about $40,000. He says it ruined his credit and discouraged future lenders.

Poole: The lender will look into that, they'll see this big deficiency judgment of tens of thousands of dollars on the record and decide maybe they don't want to take second place behind that big a judgment.

Some people get caught by surprise. They assume that by giving up the title to the property, they will be released from their financial responsibilities.

Donya Monroe is executive director of the nonprofit Neighborhood Housing Services of Southern Nevada.

Donya Monroe: Unequivocally, absolutely not. It does not automatically release you from your deficiency or your obligation to pay that loan.

Some borrowers try a short sale. That's where, before the property goes to foreclosure, it's sold for less than is owed on the loan. Again, lenders won't necessarily let you off the hook.

Bob Jacobs is a California real estate lawyer.

Bob Jacobs: I've had more than one client come in my office after they had completed a short sale and received a letter from a collections agency.

Laws differ from state to state. About 20 states have what are known as non-recourse loans. They protect the borrower, so the bank can't seize your assets if you default. In other states, borrowers are more vulnerable.

Frank Alexander is a professor at Emory Law School.

Frank Alexander: When you walk away from a debt, you should assume that you're putting at risk not only your current assets, but also your future earnings and your reserves for retirement.

So how do you protect yourself?

Alexander: The way to make sure there is no deficiency action is to have the lender provide a copy or the original of the promissory note, marked "Paid In Full." Alternatively, the lender can simply provide written documentation of satisfaction of the debt.

Housing advocate Donya Monroe says lenders may not forgive the entire outstanding balance of, say, $50,000.

Monroe: You may be able to negotiate a settlement of that $50,000. You may be able to negotiate some sort of terms into paying back a reduced amount.

All the experts recommend consulting an attorney. Even then, you may still be forced to take desperate measures. Again, James Poole.

Poole: It may be that you need to file for bankruptcy at some point to get rid of the deficiency judgment.

That's what Poole did in order to get out from under the $40,000 deficiency judgment hanging over him. Now he's financially stable, but his housing is still tenuous. Even though it's his landlord who is in foreclosure this time around, Poole and his wife still have to move.

I'm Jeff Tyler for Marketplace Money.