A deficiency judgment is a ruling made by a court against a debtor in default on a secured loan, indicating that the sale of a property to pay back the loan did not cover the outstanding debt in full. It is mostly a lien placed on the debtor for further money.
What is a deficiency action?
Utah remains one of the states that allow banks to sue a home owner after a foreclosure for any amount still owing on the loan. This type of lawsuit is euphemistically called a “deficiency action.”
How do you get out of a deficiency Judgement?
How Can I Avoid a Deficiency Judgment Following a Short Sale?
- Filing for Bankruptcy to Discharge a Deficiency Judgment.
- Negotiating With the Lender to Waive the Deficiency Judgment.
- Making a Settlement Offer.
- Your Lender May Not Sue You for the Deficiency.
Which states allow deficiency judgments?
State Deficiency Judgment Laws
| State | Most Common Type of Foreclosure | Are deficiency judgments allowed? |
|---|---|---|
| California | Nonjudicial | Not after a nonjudicial foreclosure. |
| Colorado | Nonjudicial | Yes. |
| Connecticut | Judicial | Yes. |
| Delaware | Judicial | Yes. |
What to do if a creditor is trying to collect on a deficiency?
If a creditor is trying to collect on a deficiency, speak with an attorney who is licensed in your state and familiar with debt collection. This is a legal action, and you need legal help. It may be possible to fight the collection efforts or limit how much collectors can take, but you need a skilled attorney to review your case.
Can a creditor Sue you for a deficiency?
The creditor can’t collect on the deficiency unless it is the legal payee on the note and have a security interest in the car. If a creditor sues you for the deficiency, you can ask that the court dismiss the lawsuit for the following defects: the creditor has not produced a written loan or security agreement that shows you owe the debt
What happens to my property after a deficiency judgment?
You might think that your debts are behind you after a lender takes your property, but that’s not always the case. Creditors can continue to try and collect on a property you no longer own through deficiency judgments. What Is a Deficiency Judgment?
Can a collection agency pursue a deficiency judgment?
If your lender is allowed to pursue a deficiency judgment, there is no way to know whether or not they will. In many cases, it’s not worth the trouble for lenders and collection agencies. Legal action is expensive and time-consuming.
