Deficiency Judgment

A Levels Academy Islamabad

Transcript

00:00Not surprisingly, lenders like to get their money back.

00:04And we all know they should get paid back.

00:06But sometimes you just can't pay right away.

00:09Lenders won't hesitate to take whatever recourse is needed within the boundaries of the law.

00:13And sometimes they even blur that line.

00:16It's best for you to know where that line is so you can protect yourself.

00:20Let's take the example of having to default on your mortgage,

00:23which then leads to a foreclosure on your home.

00:26Not an ideal situation.

00:28But hey, at least the headache is over, right?

00:31Well, not necessarily.

00:33If the value of your foreclosed home is less than the amount you owe,

00:37then the lender can pursue an action to obtain the amount you are short,

00:41or deficient, directly from you.

00:44If the lender obtains a judgment for that shortfall, or deficiency,

00:48it is called a deficiency judgment.

00:50For example, if you owed the lender $300,000,

00:54but your home is only worth $250,000,

00:57then your deficiency is $50,000.

01:00In Florida, a lender has to go through the state court to obtain a deficiency judgment.

01:05And the lender can obtain the judgment either as a part of the original foreclosure action

01:09or in a separate lawsuit against the borrower.

01:12But ultimately, it's up to the court to determine the final deficiency judgment amount

01:16because it is the judge that must decide the fair market value of your house.

01:20The time limit for a lender to pursue a separate deficiency judgment is one year from the foreclosure.

01:26It used to be five years, so that is at least some good news.

01:30If the lender gets a deficiency judgment against you,

01:33the lender may be able to garnish your wages or bank accounts.

01:36Be sure to see the LegalYou video on garnishment to learn more about that.

01:41And although at times it may feel like you just can't catch up on your bills

01:44and you'll never get a break from your creditors,

01:47you don't have to let them steamroll over you in court.

01:50That's because you are not alone.

01:52LegalYou is here to help.

01:54You can do this.