Will I be responsible for paying any deficiency to the lender after a foreclosure is completed on my residence?

UPDATED: Jul 28, 2011

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

UPDATED: Jul 28, 2011Fact Checked

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

Will I be responsible for paying any deficiency to the lender after a foreclosure is completed on my residence?

Current value of home is $160,000 and bank has offered to pay for $3000 (to us) cash and key and $6000 to my SBA loan to release their interest. The payoff is $154,000. We are claiming bankruptcy and wanted to know if we should include the foreclosure in the bankruptcy to avoid tax consequences.

Asked on July 28, 2011 Georgia


MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

You should include whatever you can in the bankruptcy and let the trustee figure it out with you, especially if you are filing chapter 7 and not something that will require payback or reorganization. Further, keep in mind though that once you file for bankruptcy and if you file prior to full foreclosure process has occurred, you may be stalling the foreclosure sale to begin with. Bankruptcy acts as a stay on all proceedings and debts. Your lender/servicer cannot necessarily pursue or complete the foreclosure sale without leave of court to do so. If bankruptcy sounds like an option to you for this reason only (i.e. deficiency), talk to a bankruptcy attorney or legal aid and see if deficiency judgments are allowed in your state. In Georgia, I believe if the court allows for it, a deficiency judgment is allowed but it cannot be that the bank merely shows you owe more, it has to show the property sold for fair market value and not simply a bargain basement price.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption