How to avoid a deficiency judgment?

UPDATED: Oct 13, 2011

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How to avoid a deficiency judgment?

I lost my job and took one in a neighboring state at half the pay. I owe $280,000 on a house worth about $235,000. I have about $500,000 liquid and about $225,000 in a retirement account. Is it foolish to think I could do a short sale or strategic default because the lender would see my bank statements and seek deficiency judgement?

Asked on October 13, 2011 under Real Estate Law, Georgia


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

If you want to do a short sale on your property, you first need to ascertain whether or not the loan that is on the property that you owe $280,000 on is a "purchase money" loan or not and if your state has anti-deficiency laws prohibiting deficiency judgments where the loan is purchase money.

If your loan is a "purchase money" loan, and your state has anti-deficiency laws, then you should not have any obligation on your home's loan if it goes into foreclosure or you do a short sale.

Given your situation it is best that you consult with a real estate attorney to confirm the status of your loan and your state's laws on "anti-deficiency".

Good luck.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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