What happens after a deficiency judgment in Texas?

In cases of deficiency judgments in Texas where the lender actually pursues and obtains a deficiency judgment against the borrower, the following will likely occur:

• Assuming the lender actually goes through with the legal process and costs associated with obtaining a deficiency judgment, the homeowner will still have a chance to dispute the claims in court. In short, a deficiency judgment is an award from a lawsuit in a civil trial, which the lender has won against the borrower, or ex-homeowner.

• If the award and judgment are legally viable, meaning no longer contested, the lender can take action to collect the judgment against a homeowner in any manner allowed to collect other unsecured debt obligations in the state of Texas.

• These collection methods may include going to court once more and obtaining the right to lien against a borrower’s existing assets (if any are left), garnish wages, or obtain a percentage of all other forms of income.

• Failure to adhere to any court order mandating payment to the lender, if actively avoided or unheeded by the borrower, can actually result in incarceration in a limited number of cases.

In reality, very few foreclosures actually result in deficiency judgments, but the potential of this occurring is a very real and founded concern of many borrowers. In practice, many borrowers caught in a deficiency judgment will either continue repayment of the court mandated award, often through turning over other assets or wage garnishments, or in the worst-case scenario, file Chapter 7 bankruptcy.

For more information about your specific foreclosure case, including how to prevent foreclosure, how to prevent deficiency judgments in foreclosure, and how to address ongoing deficiency action taken by lenders, consult with a foreclosure lawyer in the state of Texas.