What Is An Action For Deficiency Judgment Initiated?

by | Last updated on January 24, 2024

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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.

When can a lender obtain a deficiency Judgement?

Deficiency Judgments After Judicial Foreclosures in California. Deficiency judgments are generally allowed after judicial foreclosures in California. But the lender can’t get one if the loan was: used to buy a dwelling that consists of one to four units that’s owner-occupied (called a “purchase money” loan)

How long after foreclosure can bank sue for deficiency?

In other words, the bank has five years from the date of any sale, be it voluntary or through foreclosure, to sue the borrower for the balance owed on a mortgage debt.

How do you get rid of deficiency Judgement?

Bankruptcy Can Eliminate a Deficiency Judgment With the judgment, the lender can potentially garnish your wages or go after your assets to collect its debt. But like many other dischargeable debts, you can eliminate your liability for a deficiency judgment by filing for Chapter 7 or Chapter 13 bankruptcy.

Which states have deficiency Judgements?

State Deficiency Judgment Laws

Is Florida a non recourse state?

Unfortunately, like most states, Florida is a recourse state. It is fairly easy for a mortgage lender to file a lawsuit against you after foreclosure to obtain a deficiency judgment for the remainder of the loan.

What happens if u dont pay a Judgement?

Keep in mind that if you do NOT pay the judgment: The amount you owe will increase daily, since the judgment accumulates interest at the rate of 10% per year. The creditor can get an order telling you to reimburse him or her for any reasonable and necessary costs of collection.

Do Judgements ever go away?

In most cases, judgments can stay on your credit reports for up to seven years. This means that the judgment will continue to have a negative effect on your credit score for a period of seven years. In some states, judgments can stay on as long as ten years, or indefinitely if they remain unpaid.

Can you make payments on a deficiency Judgement?

When a deficiency balance is owed, the lender can take certain steps (including legal action) to claim the remaining debt. You may be asked to pay your deficiency balance in a lump sum, but if you don’t have the money, you can try working with the lender and come up with an affordable repayment option.

Can a deficiency Judgement be negotiated?

Negotiating With the Lender to Waive the Deficiency Judgment Some lenders will agree to waive the deficiency. When negotiating with your lender for short-sale approval, ask it to forgo the right to seek a deficiency judgment. If your lender agrees, this provision must be included in the short sale agreement.

What happens if I never pay a repossessed car?

If you don’t pay, the lender can sue you. If you don’t have a defense to the deficiency, the lender will get a judgment against you. Once the lender has a judgment, it can use various methods to collect it, including garnishing your wages or taking funds from your bank account.

How long does a voluntary repo stay on credit?

7 years

What happens if I can’t afford my car payment anymore?

If you owe less than the car’s value, you’ve got equity. If you owe more money on the loan than the car’s actual value, you have negative equity. If you have equity, selling your car directly to a car dealership or CarMax is the easiest way to get out from under a car loan you can no longer handle.

Ahmed Ali
Ahmed Ali
Ahmed Ali is a financial analyst with over 15 years of experience in the finance industry. He has worked for major banks and investment firms, and has a wealth of knowledge on investing, real estate, and tax planning. Ahmed is also an advocate for financial literacy and education.