Along with all the other financial data that people are concerned about today, struggling Kansas debtors need to know the number of deficiency judgments Kansas reports. Deficiency judgments occur in some states when a home goes through foreclosure. At a foreclosure auction the home is either sold, or the bank is required to retain the home, at which time the home is given the fair market value. If there is a difference between what the debtor owes on their property and the sale or fair market price of the home, many states allow the lender to sue the homeowner for the difference. That suit is called a deficiency judgment.
Kansas Foreclosure Laws
In Kansas, a borrower’s property serves as security for the mortgage loan. If a homeowner defaults on their mortgage, lenders file for a judicial foreclosure. The court issues a final judgment of foreclosure that allows the property to be sold at auction. However, the homeowner does have the right of redemption, allowing them to redeem their property if they make one lump sum payment in full within one year of the foreclosure date.
Kansas Deficiency Laws
While many states do not allow deficiency judgments, Kansas does. Deficiency judgments can occur after foreclosure sales, after auctions at which the home does not sell, and even after short sales. While Kansas lenders can file deficiency judgments, that does not mean they will. Deficiency judgments entail court costs and lawyer expenses, as well as time and paperwork. Lenders often do not file a deficiency claim against someone who defaults on their home loan; but they retain the option to do so with no time limits.
There are other options by which a homeowner in default on their mortgage can satisfy the debt. These include short sales and deed in lieu of foreclosure. A short sale takes place when the homeowner finds a buyer but the offer is less than the amount owed to the lender. A borrower may also negotiate with the lender to accept the deed as payment in full in lieu of a foreclosure action, which generally means they will not face a deficiency judgment. However, there are several ways of negotiating a short sale in Kansas:
- The homeowner and their lawyer negotiate with the lender to accept the short sale price as paid in full for the mortgage loan, however, this agreement should be obtained in writing to ensure that the lender will not sue for a deficiency judgment at some point in the future.
- The lender may require the debtor to sign a promissory note for payments on the difference.
- The lender may file a deficiency judgment against the debtor for the difference.
- The lender may place a lien on the debtor’s other assets.
- The lender may turn the deficiency debt over to a collection agency.
Getting Legal Help with Kansas Deficiency Judgments
One of the most important ways to avoid a deficiency judgment is to negotiate in advance with the lender to forgo this type of legal action. While the debtor can attempt these negotiations themselves, it can be much more effective to have an experienced foreclosure attorney handle these discussions. They know what is generally effective in these situations and can be more objective in obtaining the best agreement possible.
