What is a deficiency judgment?

A deficiency judgment is an order from a court in Texas that orders a debtor to pay a creditor for the remaining balance of the debt due that is not covered by a repossessed item. This typically happens in a foreclosure or repossession situation where the debtor has failed to make required payments and the lender had to seize the collateral. The amount remaining due after the creditor takes possession of the item is referred to as the deficiency balance. The creditor can then take legal action against the debtor in order to receive payment for the deficiency balance. During this process, the court may issue a deficiency judgment against the debtor, ordering them to pay the remaining balance. The court will consider a few different factors when determining how much of the deficiency balance needs to be paid. This will include the fair market value of the seized item, the amount owed on the loan, and any legal expenses incurred by the creditor in repossessing the item. Once the court has determined the amount of the deficiency balance, it will issue an order for the debtor to make payment in full. This order is known as a deficiency judgment. If the debtor fails to pay the amount outlined in the deficiency judgment, the creditor may take legal action against them in order to collect the money.

Related FAQs

What are the different types of creditors?
What is an unsecured creditor?
What is the meaning of “fraudulent transfer”?
What are the different types of debt collection actions?
What are the different strategies available to creditors to collect on debts?
What is a proof of claim?
What is a turnover order?
What is a non-dischargeability action?
What is a lien?
What are the different types of bankruptcy?

What is a deficiency judgment?

Related FAQs

Related Blog Posts