Sometimes the money from the judicial sale of a home in foreclosure will be less than the value of the mortgage. When this happens, the mortgage company can sue you for the remaining debt owed. This is called a deficiency judgment.
It used to be rare for lenders to sue for the deficiency judgment, however, this is no longer the case. Your lender can sue for a deficiency at the time of the foreclosure or after the sale of the home.
Your lender cannot sue for a deficiency judgment if:
- You have agreed to a deed-in-lieu of foreclosure; or
- You make an agreement with your lender, that after the sale they will not sue to recover the rest of the value of the house.
You should talk with a lawyer about whether filing bankruptcy is a good option for you.
For more information, see the video What happens after the foreclosure sale.
Updated: May 2018