Deficiency judgments are generally orders made by a foreclosure court to hold the homeowner personally responsible for any unpaid debt. These judgments are most common when dealing with a foreclosure, because they typically occur when the price paid in the sale of the home does not satisfy the debt owed on the property. This means when homeowners default on a mortgage and the physical value of the property being foreclosed on doesn’t cover the remaining amount of the loan, the lender typically seeks a deficiency judgment to recover the amount lost in the foreclosure. For example, if your property is in foreclosure and it’s valued at $60,000 dollars but you owe $120,000, the lender will seek a deficiency judgment against you to recover the $60,000 dollars left over on the balance of the loan. So, what are the deficiency judgments Vermont rules?
Is Deficiency Judgment a Lender Option in Vermont?
Yes, in most cases in the state of Vermont the lender is entitled to pursue a deficiency judgment if a property that is in foreclosure won’t cover the cost of the loan balance. The borrower will be responsible for the balance left over from the sale of the property to the amount of the original mortgage, and the lender will be able to pursue payment of the balance by property seizure or wage garnishment.
What a Deficiency Judgment can Cost
Should your lender win a deficiency judgment against you, you will automatically be held financially responsible for much more than just the judgment amount.
- In most cases, you will be held liable for all of the court costs associated with the foreclosure, along with any and all costs incurred by the lender when filing for the deficiency judgment.
- You will also be held legally responsible for the lender’s recovery of all costs, meaning it will be legal for the lender to seize personal property of yours in order to satisfy the loan balance.
- These legal measures can also include wage garnishment in some states.
When is a Deficiency Judgment Likely?
Most times when a lender is entitled to pursue payment through a deficiency judgment, it’s difficult to tell whether or not it will. Often, a lender does not wish to deal with the hassle of filing for a deficiency judgment, mostly due to the initial costs of legal action which the lender isn’t likely to recover from the borrower immediately anyway. Also, there are different types of loans which don’t even allow deficiency judgments as an option, such as non-recourse loans.
Getting Help
The best way to protect yourself from a deficiency judgment is to avoid foreclosure entirely. If you are having a hard time making your house payments, you should consult with a qualified and experienced foreclosure attorney who can help you explore your options and negotiate with your lender to get the best possible resolution.
