What is a deficiency judgment?

A deficiency judgment is a court-ordered debt repayment issued by a judge in a civil lawsuit involving a debtor and creditor. This type of judgment is granted when the sale of a debtor’s assets, such as property, fails to cover the full balance of a debt or loan. A deficiency judgment enables the creditor to obtain the remaining amount from the debtor. This amount is typically collected through an order of wage garnishment or bank levy. In North Carolina, a deficiency judgment can be obtained when creditors sue a debtor in civil court for payment of an unpaid debt. The creditor must prove that the debt was actually incurred and unpaid, as well as prove the amount owed. After the amount has been established, the court can enter a deficiency judgment for that amount. The creditor can then use this judgment to collect from the debtor. It is important to note that deficiency judgments in North Carolina are usually temporary and can be paid off by the debtor. However, they still have a negative effect on the debtor’s credit rating. Therefore, debtors should take steps to avoid such judgments by properly managing their debt and communicating with their creditors. If the debtor is unable to pay the balance of the debt, they should consider negotiating a settlement agreement with their creditor.

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