A deficiency balance on foreclosure—also known as a mortgage deficiency or deficiency balance—occurs when a home or property is foreclosed on and the sale proceeds are not sufficient to pay off the mortgage. The remaining balance owed on the mortgage is a deficiency balance or mortgage deficiency.

And if a mortgage lender (bank or mortgagee) files a lawsuit against a mortgagor (debtor) who defaulted on a mortgage, the lender may obtain a court judgment known as a deficiency judgment. With this judgment the lender can try to garnish the debtor’s wages or go after the debtor’s other assets for payment or satisfaction of the deficiency judgment.

A deficiency judgment may be discharged in Chapter 7 or Chapter 13 bankruptcy.

Laws vary from state to state and a state’s laws and the terms of the mortgage may determine whether the mortgage lender will pursue a mortgagor who defaulted on a mortgage for any deficiency balance.

In Idaho, if a property is foreclosed upon and the sale does not cover the outstanding mortgage balance, the lender may pursue a deficiency balance or mortgage deficiency from the borrower. Idaho law permits lenders to seek a deficiency judgment against the borrower for the remaining balance owed. This process involves the lender filing a lawsuit against the borrower after the foreclosure sale. If the court grants a deficiency judgment, the lender can then attempt to collect the debt by garnishing the borrower's wages or seizing other assets. However, borrowers in Idaho have the option to discharge a deficiency judgment through bankruptcy under Chapter 7 or Chapter 13. The specific rights and obligations regarding deficiency balances and the ability of lenders to pursue them can be influenced by the terms of the mortgage agreement and the application of state statutes. It is important for borrowers facing foreclosure to understand their rights and potential liabilities under Idaho law.