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 New Hampshire, if a property is foreclosed upon and the sale does not cover the outstanding mortgage balance, the lender may seek a deficiency judgment against the borrower for the remaining amount. This is known as a deficiency balance or mortgage deficiency. New Hampshire law allows lenders to pursue deficiency judgments following a foreclosure sale, but there are specific procedures and time frames that must be followed. For instance, the lender must obtain a court judgment to pursue the borrower's other assets or garnish wages. However, borrowers have the option to discharge the deficiency judgment through bankruptcy under Chapter 7 or Chapter 13, which can provide relief from the debt. It's important for borrowers in New Hampshire to understand their rights and obligations under state law and the terms of their mortgage agreement when facing a potential deficiency judgment after foreclosure.