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 West Virginia (WV), if a property is foreclosed upon and the sale does not cover the outstanding mortgage balance, the lender may pursue the borrower for the remaining deficiency balance. This is done through a deficiency judgment, which is a court order that allows the lender to collect the remaining debt from the borrower. The lender can use various methods to collect this debt, such as garnishing wages or seizing other assets. However, the lender's ability to pursue a deficiency judgment may be subject to certain conditions and limitations, which can be influenced by the terms of the mortgage agreement and state statutes. In West Virginia, deficiency judgments are allowed, but they are subject to specific procedural requirements. For instance, the lender must file a separate lawsuit to obtain a deficiency judgment after the foreclosure sale. Additionally, borrowers in West Virginia have the option to discharge a deficiency judgment through Chapter 7 or Chapter 13 bankruptcy, which can provide relief from the obligation to pay the remaining mortgage debt after foreclosure.