Homeowners facing foreclosure need to prepare for the possibility of a deficiency judgment. Deficiency judgments occur when a lender sells a foreclosed property, and the sale proceeds fall short of the outstanding mortgage balance. In this case, the lender can sue the former homeowner for the remaining debt, known as the deficiency.
Understanding how to defend against these judgments can protect homeowners from additional financial burdens after foreclosure.
Deficiency judgments in South Carolina
In South Carolina, lenders can seek deficiency judgments after foreclosure. However, homeowners have options to defend against these claims. One of the most effective defenses involves challenging the fair market value of the property. South Carolina law requires that the court confirm the sale and consider whether the sale of the property matched its fair market value. If the property sells for less than what it is worth, the homeowner can argue that the lender did not act in good faith to obtain a reasonable price.
Challenging the foreclosure
Another key defense in South Carolina involves examining the foreclosure process itself. Homeowners should ensure that the lender follows all legal requirements, including providing proper notice of the foreclosure and conducting the sale in compliance with state laws. If the lender fails to follow these procedures, the foreclosure might be invalid. This prevents the lender from obtaining a deficiency judgment whatsoever.
Alternatives to submitting to a deficiency judgment
Negotiating with the lender can present reasonable alternatives. In some cases, lenders may agree to waive the deficiency if the homeowner cooperates with the foreclosure process or consents to a short sale. This negotiation can prevent a deficiency judgment and provide a more favorable outcome for the homeowner.
Filing for bankruptcy may also offer protection against deficiency judgments. Under bankruptcy laws, it is possible to discharge the deficiency debt or establish a repayment plan. This can provide relief from the financial burden, but it is important to carefully evaluate this option due to its long-term implications.
Homeowners in South Carolina have rights and viable options for defending against deficiency judgments. It is possible to capitalize on these solutions by taking proactive steps when foreclosure looms close at hand.