What is a deficiency judgment?

A deficiency judgment is a legal order requiring a debtor to pay a creditor the difference of a debt that is not able to be fully satisfied by the assets of the debtor. In Washington, a deficiency judgment can be issued when a debtor has not fully paid a loan obligation after a foreclosure action. When this happens, the creditor can obtain the deficiency judgment from the court if the debt amount is greater than the value of the assets of the debtor. The court will require that the debtor pay the deficiency amount in full, including any additional interest and cost associated with the foreclosure action. This amount must be paid back within fifteen days from the date of judgment. If the debtor does not pay back the deficiency amount in full, the creditor can take action to collect the deficiency amount in a variety of ways. In some cases, the creditor can garnish wages or place a lien on the debtor’s property in order to collect the deficiency amount. A deficiency judgment is considered a legal debt and will remain on the debtor’s credit report until paid off in full. It is important to note that the creditor must prove to the court that the amount claimed is correct in order to obtain the deficiency judgment.

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