Skip to Content Top

How Deficiency Judgements Work in Illinois


What is a Deficiency Judgement?

A deficiency judgment can be ordered by a court if a lender wants to pursue the balance of your loan after your property has been foreclosed. The sale proceeds from your foreclosed property are supposed to go towards paying off your debt and other fees from your collection. However, if your property sells for an amount that isn’t enough to cover your debt, you will still owe money and the court can issue a deficiency judgment that makes you liable for the balance.

How Does a Deficiency Judgment Work?

For example, let’s say the debt owed is $300,000, but your home only sells for $200,000. The deficiency is then $100,000. In Illinois, foreclosures are judicial, which means they are administered through the state court system. The lender can file a lawsuit against the borrower and obtain a judgement: either an in personam deficient judgement or an in rem deficiency judgement.

If you are given a deficiency order by the court, you are legally obligated to payback the lender. If you don’t pay your lender, they can collect the debt through the following means:

  • Wage Garnishment: A portion of your paycheck is taken until your debt is repaid
  • Levying Accounts: Cash can be taken from your bank accounts to reduce your debt
  • Property Lien: Your lender will be given legal interest in items you own

In the United States, 1 in every 2043 homeowners falls behind on their mortgage payments and loses their home through foreclosure. While losing your home is a stressful ordeal, the nightmare can continue if the foreclosure sale price is less than the amount remaining on your mortgage—known as a “deficiency.”

In Personam Deficiency Judgement

An in personam deficient judgement allows the lender to collect the deficiency amount from the borrower by garnishing wages, collecting from a bank account or taking non-exempt assets, such as valuable collections, family heirlooms and investments. The only way to get out of an in personam deficient is to file for bankruptcy. Chapter 7 bankruptcy will discharge the judgement completely, while Chapter 13 may require you to repay part of the debt.

In Rem Deficiency Judgement

An in rem deficiency judgement is a judgement against the property itself. It’s usually entered as part of the foreclosure judgement and comes into play if the borrow redeems the property. Redemption occurs when the homeowner reclaims the property by paying the amount owed, as well as certain additional costs and interest. If the borrower redeems, the in rem deficiency judgement preserves the lender’s right to a lien on the property for the debt balance that remains. In Illinois, the redemption period for residential mortgages is 7 months after the date of complaint, or 3 months after the judgement is served, whichever is later.

If somebody is trying to collect on a deficiency, speak to one of our Chicago consumer lawyers at Atlas Consumer Law immediately. It may be possible to fight the collection efforts or limit how much can be collected, especially if a creditor takes a default judgement against you and you were unaware of the deficiency case. You must act quickly though.

Contact us onlineor by telephone at (312) 313-1613 to speak with an attorney.