Credit gives the word to pay either by repaying it or returning those resources later. In other words, this credit is the method of making the reciprocity formal, legally enforceable, and of course, extensible to a vast group of people who are not related.
However, the resources provided may be financial or have goods or services, like consumer credit. The credit covers any form of deferred payment. Credit generally gets extended by the creditor, the debtor or lender, and sometimes the borrower.
A deficiency judgment represents a Court order in a highly specific scenario or circumstance. This happens whenever there is a debtor who has defaulted on his/her secured loan. This takes place whenever the sale of the property which was used to secure the loan, is not successful in making up the debt in its entirety. This enables the collection of extra money from the debtor on the lender’s part. Many regions and authorities do not allow the same after foreclosure of any home. Laws also prevent financial institutions in several areas from selling off properties at lower values than their actual market rates, and then asking for the balance amount from the defaulting borrower. Lenders with the deficiency judgment in place, may have powers to seize other property of the debtor or withdraw money from their accounts in order to make up the difference in funds.
Deficiency judgments are sometimes seen in the real estate sector, when home loan borrowers default on their loans, leading to them being classified as non-performing assets. Thereafter, once they are in no position to repay the loan, there is the foreclosure of the same, following which the lender sells off the property to recover the dues. However, there are times when the entire amount due is still more than the money realized or that can be realized by selling off the property in question. This is then made up by the lender through a deficiency judgment. Home loans usually avoid these scenarios through using the property’s appraised value as the foundation for agreeing on the loan amount, and also requiring a down payment from home loan borrowers.
