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 Utah, if a property is foreclosed and the sale does not cover the outstanding mortgage balance, the lender may pursue the borrower for the remaining deficiency balance. Utah law allows lenders to file a lawsuit to obtain a deficiency judgment against the borrower within three months after the foreclosure sale. If the lender is successful, they can use this judgment to garnish wages or seize other assets of the debtor to satisfy the debt. However, borrowers have the option to discharge the deficiency judgment through Chapter 7 or Chapter 13 bankruptcy. It's important to note that the specifics of whether a lender will seek a deficiency judgment can depend on the terms of the mortgage agreement and the type of foreclosure process used. Utah has both judicial and non-judicial foreclosure processes, and the rights and remedies for both lenders and borrowers can vary depending on which process is followed.