When a person needs to make a large purchase, such as a new home, it is not often that they have the full amount of funds necessary in their bank account. Therefore, potential home-buyers borrow money from a lending agency in the form of a home loan so that they can pay the seller in full, and then pay back the lending agency through time, with interest. However, in some situations, homeowners cannot make their mortgage payments to the lending agency.
In these cases, the lending agency has the right to foreclose on the house. In a foreclosure situation, the lending agency takes ownership of the home and auctions it off to the highest bidder. The agency then keeps the proceeds in order to regain the money they originally lent to the home-buyers.
What if the house cannot be sold for the amount that is owed to the lending agency? Since the lender wants the full amount of money back that was borrowed, they might pursue further legal action against the debtors in the form of a deficiency judgment.
A deficiency judgment is legal action to make the borrower personally liable for the full amount of the judgment, which might include not only the money still owed from the original loan, but also the agency’s costs of pursuing legal action. If a person cannot satisfy the deficiency judgment, the lender has a right to take employment wages or personal items.
If a deficiency judgment is successfully filed against you, you should seek legal assistance immediately. An attorney can discuss with you your remaining options, which include:
- Exemption from creditors