What is a Deficiency Judgment in a Foreclosure?

The financial hardships created by the coronavirus have affected almost all Florida families. Homeowners who never missed a payment are suddenly learning about the foreclosure process. While this is a difficult situation, you don’t have to face it alone. An experienced Florida foreclosure attorney can help you understand the foreclosure process and explore any options for keeping your home. If a foreclosure cannot be avoided, an attorney can help mitigate your financial losses. One important consideration is a deficiency judgment.

Florida has a judicial foreclosure process. This means that a foreclosure must go through the state courts and be ordered by a judge in order to be legally valid. Once a foreclosure has been ordered, the property will be sold at auction. Foreclosed properties almost always sell below market value when they are sold at auction. Because of this, the auction sales proceeds could be less than the total amount owed to the bank. This is known as a “deficiency.” A borrower can be ordered to pay the difference between the sales proceeds and the remainder owed to the bank through a court order known as a deficiency judgment.

A deficiency judgment can be ordered as part of the foreclosure process (so long as the borrower was personally served with the complaint that initiated the case). A deficiency judgment can also be obtained by the bank in a separate lawsuit after the sale unless such an order was specifically prohibited in the original foreclosure case. Once a bank obtains a deficiency judgment from a court, it can be enforced through traditional collection methods, such as wage garnishment or levying your bank accounts. This is why it is so important to avoid a deficiency judgment whenever possible.

 
The experienced Casselberry and Oviedo foreclosure attorneys Quattrocchi and Torres can help you explore all legal options for mitigating your financial losses in a foreclosure. Call 407.452.4918 or contact us online to schedule your free consultation.