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Foreclosures are a little complicated. What doesn’t help matters is that the process is filled with complex terms like breach notice, REO, judicial foreclosure, and even deficiency judgment. What is a deficiency judgment in Wisconsin? Though not entirely unique, Wisconsin is one of the states where lenders can demand a deficiency judgment. Kingstad Law will help clear things up as we explore this term and walk you through the foreclosure sale process.
What Happens if Your Foreclosure Goes To Sale?
When a home goes up for sale under foreclosure, it will be open to bids, much like a typical home sale. Where this differs is the bank will submit the first bid, known as a credit bid. The lender can only bid up to the amount of total debt owed. If you only owe $10,000 on a $100,000 home, $10,000 is still all they can bid.
However, the bank doesn’t have to bid the full amount, at least to start with. If the bank purchases the home during this process, then the home is considered real estate owned or REO. All that means is the bank owns the home and will prepare it for a proper sale including repairing any major damages and re-keying the home.
Could You Owe Money After Your Foreclosure?
If you need a stronger reason other than losing your house to avoid foreclosure in Wisconsin it’s that you could actually owe money when all is said and done. This is where the deficiency judgment comes in.
A deficiency judgment exists to help the lender recoup losses in the event that the home is worth less than the debt owed. However, in Wisconsin, there are a few incentives that encourage lenders to forgo such a judgment including a shorter redemption period before the sale.
Even if a deficiency judgment is sought, there are a few protections in place. After the sale occurs, the court will assess the home’s fair market value. The deficiency amount is limited to the difference between the fair market value and the mortgage debt owed.
This means that for most homes unless the housing market falls apart, the lender will likely not be able to file for a deficiency judgment unless you let the house deteriorate or damage the house whether intentionally or accidentally. Though it can be tempting to take out your foreclosure frustrations on your home, we’d strongly advise against that for this reason.
How Would a Lender Collect a Deficiency Judgment?
A lender will resort to typical collection methods if a deficiency judgment occurs. This can include garnishing wages or levying a bank account. However, a bankruptcy such as Chapter 7 or Chapter 13 can clear you of this. All of this is why you really should seek the help of a skilled and experienced foreclosure attorney.
Which is Worse Foreclosure or Bankruptcy?
Foreclosure Attorney in Milwaukee
Are you facing foreclosure in Milwaukee? You should take advantage of the services provided at Kingston Law. We are based in the Milwaukee area and we’ve helped so many people who have faced foreclosure save their homes or shed financial debt. Contact us for a free consultation today!
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