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Deficiency judgments in foreclosure proceedings occur when the property is sold at a foreclosure sail for less than what is owed on the property by the debtor. For example, when a property that is worth 300,000 is sold at a foreclosure sale for $240,000 there will be a $60,000 deficiency. This deficiency can be collected from the debtor if certain circumstances exist. There are restrictions on when deficiency judgments are allowed in Kentucky.
Deficiency Judgments in Kentucky
Kentucky is a judicial foreclosure state. This means that before a mortgage company can foreclosure on an individuals’ home they must first file a complaint for foreclosure and lis pendens in the court of he county that the property is located in. A defendant or homeowner will have 20 days to respond to the complaint for foreclosure. If the defendant files and answer then the parties will engage in the civil litigation process including discovery periods, hearings, and motions. If the defendant doesn’t file an answer a default judgment will awarded by the court. The mortgage company will then be required to publish notice of the sale for three weeks in the appropriate legal organ before they can sell it at a foreclosure auction or sale.
In order for a bank to obtain a deficiency judgment in Kentucky the defendant must have failed to answer the complaint and have a default judgment entered against it. After the foreclosure sale, the mortgage company can bring an action for deficiency judgment and will simply have to show that the defendant never filed an answer. At this point a deficiency judgment will be granted and the homeowner will find himself or herself in the position of having the judgment reflect on their credit report as well as the possibility of wage garnishment
Seeking Legal Help
Foreclosures are a lengthy and complicated process. If you’ve been served with a foreclosure complaint it is crucial to contact an attorney licensed to practice law within the state of Kentucky. Only an attorney that has experience with Kentucky foreclosure law can provide you with the advice and legal guidance that you need to protect your legal rights. Your behavior after the complaint is filed can have far reaching consequences as far as you being responsible for additional debt. Don’t hesitate to contact an attorney to assist you.
