What is a deficiency judgment?

A deficiency judgment is a court order for a borrower to pay a lender the remaining balance on a debt if the value of an asset, such as a home, is not high enough to cover the full amount of the loan. In North Carolina, if a borrower defaults on a loan secured by a mortgage or deed of trust, the lender may initiate a foreclosure proceeding. After the lender completes the process of advertising and conducting a sale of the home, the proceeds of the sale may not be enough to pay off the loan in full. In such cases, the lender can seek a deficiency judgment. This court order requires the borrower to pay the lender the difference between the amount owed on the loan and the proceeds of the sale. It also allows the lender to pursue other means of recovering the debt, including wage garnishment or liens against other assets.

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What is a deficiency judgment?

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