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Worst Case Scenarios – Consequences of a Deficiency Judgment
Posted by: Marlyn Wiener
October 31, 2008
Topic: Foreclosures
The immediate consequence of a deficiency judgment is that once properly recorded in the Florida County in which it was obtained, the deficiency judgment automatically becomes a lien against any other real estate of the debtor (borrower) located in the County and that lien can be foreclosed upon in the same manner as a mortgage lien. In addition, a judgment of record is a further negative mark on the borrower's credit history and will generally stop a new lender from extending any credit to a borrower until the judgment is satisfied.
A deficiency judgment can be recorded in other counties within the State of Florida and can be transferred to other states as a foreign judgment. The lender who has obtained a deficiency judgment will seek to collect payment of the deficiency judgment from non-exempt assets of the borrower (assets that are not protected from creditors by law) including, in some cases, garnishing the borrower's wages. Some examples of exempt assets (assets that cannot be collected on to pay a deficiency judgment) are life insurance policies and annuity contracts, pension and profit sharing plans, IRAs, disability income and prepaid college plans.
