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deficiency judgment |
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deficiency judgment A lawsuit and judgment against a debtor for the remaining balance due on a promissory note after giving credit for any repossessed or foreclosed collateral. Example: Sarah has a mortgage for $200,000 on her home. She defaults on her loan, and the bank forecloses. The bank sells the home at a foreclosure auction to a third party who bids only $160,000 because the home has been allowed to deteriorate and needs many repairs. Sarah still owes the bank $40,000 unless she lives in a state that does not allow deficiencies on home loans. The bank may sue Sarah and obtain a judgment for $40,000, called a deficiency judgment. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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The creditor may then file a lawsuit, obtain a deficiency judgment, and try to recoup the difference by acquiring your other assets, such as bank accounts, and may even garnish your wages. Another disadvantage to this section is that it deprives the lender of a deficiency judgment. Section 580b of the California Civil Code of Procedure prohibits, among other matters, a deficiency judgment after the foreclosure sale of real property that secures seller financing provided for the purchase of such real property. |
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