Deficiency Judgment Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Deficiency Judgment, written in plain English, along with examples of how it is used.
What is Deficiency Judgment?
n. The judgment issued for the amount that is not covered by the value of the security placed for the loan or installment payments. Most states require a judicial foreclosure is filed instead of just foreclosing on real property. Additionally, after foreclosure on the mortgage or deed of trust, some states allow a lawsuit for a deficiency judgment. The lease or installment contract usually has the deficiency judgment written into it. However, there is the risk that the sale of a repossessed vehicle will be at a wholesale price or to a friend at a sheriff’s sale or auction which leaves the debtor responsible for the difference between the sale price and the remainder due on the contract or lease.