What is a Deficiency Judgment after a Texas Foreclosure?

E.J. Simonsen | May 26, 2022

Most homeowners can be held liable for a deficiency after a property foreclosure in Texas. This leads to what is called a Deficiency Judgment.

What is a deficiency judgment in Texas?

 A deficiency judgment arises when the sale price of a home does not cover the remaining debts, and a lender wins a lawsuit seeking payment of the difference.

Example: Say the total debt owed on the home is $200,000, but the home only sells for $150,000 at the foreclosure sale. The deficiency is $50,000.

Generally, when the lender gets a deficiency judgment from the courts, the lender may collect this amount from the borrower, AKA you.

How will a deficiency judgment affect me?

 If the lender succeeds in obtaining a deficiency judgment, they can attempt to collect the remaining debts in a variety of ways. This includes putting a lien on other properties that you may own, garnishing or seizing other assets, or levying your bank account. 

The deficiency judgment will also remain on your credit report for seven years. This means that if you apply for a mortgage, car loan, credit card or any other loan, those lenders will see the judgment until it falls off your report. Your credit score will also suffer if a court files a deficiency judgment against you.

When will a lender obtain a deficiency judgment?

For a nonjudicial foreclosure (the most common type of foreclosure,) the lender has a choice to either file a lawsuit to obtain the deficiency judgment within two years after the foreclosure sale or forgive the debt.

How can I avoid a deficiency judgment?

First, it’s best to look at how much you owe; is it an amount you can pay off or not? Sometimes it makes better financial sense to pay off the remaining debt than to engage in a potentially lengthy and expensive legal battle. 

If paying off the remaining debts is not an option, then it’s best to start looking for your own legal counsel. Your legal counsel may seek to get you an exemption from the lender or other creditors, file a motion to have the judgment overturned, or, if necessary, help you declare bankruptcy.

If your home is facing foreclosure, if you already have a deficiency judgment, or if your lender has filed to obtain a deficiency judgment, it's important to seek legal support now, not later. The Lane Law Firm is here to help. Give us a call at 877-408-3328 or schedule a consultation today, and we'll see how we can best resolve your situation. 


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