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You Can Fight a Deficiency Judgment


A deficiency judgment against a consumer or homeowner can be scary. The amounts owed are usually high, and it can seem like you’re paying for an item that you have already lost to foreclosure or repossession. However, there are some things that you can do to fight back against anybody who is trying to collect on a deficiency judgment.

What is a Deficiency Judgment?

A deficiency judgment is the difference between what you owe on secured property, such as a house or a car, and what the property was worth. Cars are often repossessed, and are “upside down” in value, although because of the foreclosure crisis, a lot of people were faced with deficiencies when their home was foreclosed on.

When the property is sold at foreclosure auction, and sells for less than what is owed on the loan, many consumers end up with deficiency judgments against them. Deficiencies related to foreclosures are often more serious than auto deficiencies, just because of the amount of money involved. A foreclosure deficiency can be in the hundreds of thousands of dollars.

Time Limits

A lender only has one year from the foreclosure judgment to ask the court to enter a deficiency judgment. Often, because deficiency debts, like many other debts, are bought and sold, creditors often miss this deadline.

Value Problems and Defenses

A deficiency is technically not the difference between the foreclosure sale price and what you owe. It is the difference between the fair market value of the home at the time of foreclosure sale, and what you owe. In many cases, banks will sell property at foreclosure auction for less than what these properties are actually worth, leaving the consumer with a larger deficiency than he or she should have.

Consumers have a right to challenge what the fair market value of the home was at the time of foreclosure sale. Consumers can show that the property was upgraded, or that there was some benefit to the property (such as its location) that made the home worth more than what it sold for. Consumers can retain appraisal experts, to provide expert testimony as to the value of the property.

In some cases, there may be no deficiency at all, if the homeowner can prove that the property was worth what the consumer owed at the time of the foreclosure sale.


The law requires that foreclosure sales be properly advertised, in order to encourage willing buyers to pay as much as possible. Many foreclosure firms forget to publish or advertise the foreclosure sale. This can lead to property being sold for way less than what it is actually worth.


Because deficiencies are bought and sold, the company that says you owe them money, may not have really legally purchased the debt. Just like foreclosures, where lenders say they have a right to foreclose but they do not, many creditors do not have the right to collect on judgments because they can’t demonstrate that they legally own the debt they are trying to collect.

Do you have questions about foreclosure? Contact Jacobs Legal to speak with one of our Miami consumer rights attorneys today.

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