Deficiency Balance

A “deficiency balance” is the difference between what the creditor lent you and what you owe on the loan. An example of a deficiency balance is: if you were to have an automobile repossessed, you will still owe the difference between what the car was worth and the amount of the loan. However if they auction your car you will be responsible for the difference between the loan and the amount they were able to collect on the car. Even though you do not have the car, you will have to pay the balance or risk legal action.

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