What Happens If My Lender Gets a Deficiency Judgment in Indiana?
A deficiency judgment is a court order requiring you to pay the difference between what your home sold for at the sheriff sale and what you owed on the mortgage. In Indiana, lenders have the right to pursue deficiency judgments under IC 32-29-7-11. Understanding how deficiency judgments work, how lenders collect them, and your options for dealing with them is critical for anyone who has been through or is facing foreclosure.
Call (317) 495-3440 — Free ConsultationWhat Is a Deficiency Judgment?
A deficiency judgment arises when the proceeds from the sheriff sale do not cover the full amount of the mortgage debt, plus fees, costs, and attorney fees. For example, if you owed $200,000 and the property sold for $150,000 at the sheriff sale, the deficiency is $50,000. Under IC 32-29-7-11, the lender can file a separate lawsuit to obtain a judgment for this deficiency amount. The deficiency judgment is a personal judgment against you — not just against the property.
How Lenders Collect Deficiency Judgments in Indiana
Once a deficiency judgment is entered, the lender has several collection tools available under Indiana law: (1) Wage garnishment — the lender can garnish up to 25% of your disposable earnings; (2) Bank account levy — the lender can seize funds from your bank accounts; (3) Liens on other real property — the judgment becomes a lien on all real property you own in the county; (4) Seizure of personal property — the lender can seize non-exempt personal property. Indiana's exemption laws protect certain assets from collection.
Indiana's Exemptions from Deficiency Collection
Indiana law provides certain exemptions that protect assets from judgment creditors. Under IC 34-55-10-2, the homestead exemption protects up to $22,750 of equity in your primary residence. Under IC 34-55-10-1, personal property exemptions protect certain household goods, tools of the trade, and other items. Wages are partially exempt from garnishment under federal law. Consulting a licensed Indiana attorney about your specific exemptions is strongly recommended if you are facing a deficiency judgment.
Negotiating or Settling a Deficiency Judgment
Deficiency judgments are often negotiable. Lenders frequently settle deficiency judgments for less than the full amount, especially if you have limited assets and income. Negotiating a settlement requires demonstrating your financial situation and making a lump-sum offer or structured payment proposal. Some lenders will agree to a full release of the deficiency in exchange for a partial payment. A licensed Indiana attorney can help you negotiate a deficiency settlement.
Bankruptcy as a Defense Against Deficiency Judgments
Chapter 7 bankruptcy can discharge a deficiency judgment, eliminating your personal liability for the debt. If you file Chapter 7 after a foreclosure, the deficiency judgment is treated as unsecured debt and is discharged along with other unsecured debts. Chapter 13 bankruptcy allows you to repay the deficiency (and other debts) through a structured repayment plan. Consulting a licensed bankruptcy attorney about your specific situation is strongly recommended.
Indiana Legal References
The following Indiana statutes are referenced on this page. Links go directly to the Indiana General Assembly website.
Frequently Asked Questions
Get Your Free Cash Offer
Tell us about your property and we'll be in touch with a no-obligation cash offer.
Why homeowners choose us
- Speak directly with Vince — not a call center
- Get a real cash number for your property
- Understand your foreclosure options before deciding
- Close in as little as 7 days if you choose to move forward
Written offer
Send Your Info — We'll Be in Touch
Prefer to talk first?
Call Vince directly — no hold music, no call center. Just a straight conversation about your situation and your options.
Call anytime
Free Confidential Call
Confidential · No obligation · Vince answers directly