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Our Offices

  • Vernon Office


    244 State Hwy 94
    Vernon, New Jersey 07462

  • Wayne Office


    73 Mountainview Blvd
    Wayne, New Jersey 07470



  • Pompton Lakes Office


    58 Colfax Avenue #1
    Pompton Lakes, New Jersey 07442

  • Hackensack Office


    41 Main Street
    Suite 2
    Hackensack, New Jersey 07601



  • Nutley Office


    345 Centre Street
    Suite 2
    Nutley, New Jersey 07110



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    I highly recommend Mr. Zimmermann as an attorny. I recently purchased an investment property and boy was he helpful. He was easily available, very clear in explaining various concepts, laws and regulations, and provided very helpful tips o...
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NJ Debt Relief Attorney Helps Homeowners Avoid Deficiency Judgments

Using proven strategies for resolving mortgage debts

If you have fallen behind on your mortgage payments, you might be thinking about selling your home to avoid foreclosure. In many cases, homeowners can make a home sale that satisfies their mortgage debt and they might even come away with a profit. However, if the property is worth less than the outstanding mortgage balance, the mortgage holder can sue for the remaining amount due, obtaining what is called a deficiency judgment. Throughout NJ, the Law Offices of James C. Zimmermann helps homeowners resolve debt problems, such as mortgages that exceed property values. We can help relieve you from your debt obligations without incurring liabilities that might hamper your efforts to recover financially.

What is a deficiency judgment?

If you sell your home, you must get enough proceeds from the sale to satisfy any remaining mortgage debt. But in a real estate market downturn, it is quite possible that the home’s value is less than the outstanding loan. The deficiency is the amount by which a sale falls short of satisfying the mortgage in full. Your lender can now go to court and obtain a deficiency judgment and can take collection action against you, which might include wage garnishment.

How a deficiency judgment works

Let’s say you bought your house when the market was hot. The sale price was $500,000 and your original mortgage was $400,000. You lived in the home a few years before being laid off from work. You then had to take a job paying far less than you were earning when you bought the house. For the last few months, you haven’t been able to make your mortgage payments, so you decide to sell. You currently owe $360,000, but the bottom has dropped out of the market in your area and the house sells for $330,000. That creates a $30,000 deficiency, which your lender can demand that you pay.

Avoiding deficiency judgments through a short sale

One way to avoid a deficiency judgment is to ask your lender to allow a short sale. Basically, this is the lender’s voluntary waiver of its right to a deficiency judgment. The lender may not want to devote resources to your case. They may just want the loan off the books and are willing to take a slight loss. Depending on the amount of the deficiency, you might get your lender to agree. However, you will need to pay taxes on the amount of the mortgage that is forgiven.

Avoiding deficiency judgments through Chapter 13 bankruptcy

Another option for many homeowners is to file a Chapter 13 bankruptcy. This is a debt restructuring plan, by which you partially repay your debts from your monthly disposable income for a period of three to five years. The bankruptcy court then discharges your remaining unsecured debt. Although your mortgage is a secured debt and so is not discharged, your mortgage arrears can be included in the plan. Chapter 13 can enable you to catch up on mortgage payments going forward by reducing the burden of other debt, thus allowing you to keep your home. You might also be able to remove a second mortgage.

Deficiency judgments should be avoided, because they saddle you with excess debt without any tangible benefit. An experienced debt relief attorney can help you find the appropriate strategy for avoiding deficiency judgments, so you can rebound more quickly to financial health.

Ask an experienced Chapter 13 bankruptcy lawyer about deficiency judgments in New Jersey

The Law Offices of James C. Zimmermann in Northern New Jersey is a debt relief agency that helps homeowners avoid deficiency judgments, keep their homes and discharge debts under Chapter 13. We have offices in Vernon, Wayne, Pompton Lakes, Hackensack and Nutley. To schedule a free initial consultation, call 973-764-1633 or contact us online.