An Indiana Deficiency Judgment Arises Out Of The Foreclosure Judgment Itself, Not A Separate Action

I am sometimes asked by out-of-state lawyers or clients whether Indiana has a separate process for the entry of a deficiency judgment.  The answer is no. 

My definition.  The terminology “deficiency judgment” refers to the amount of the money judgment remaining after deducting the price paid at the sheriff’s sale.  More generically, the word "deficiency" describes the difference between the debt amount and the value of the collateral securing the debt.  Think of it as negative equity.   

Indiana’s process.  It’s my understanding that some states require a post-sale action to obtain a deficiency judgment.  Not in Indiana.  Here, a judgment entered in a mortgage foreclosure action typically is comprised of two elements.  The first is a money judgment on the promissory note and/or guaranty, and the second is a decree of foreclosure based on the mortgage.  The deficiency is a product of the sheriff’s sale.  In Indiana, a deficiency judgment isn’t a technical or statutory term.  The label simply describes the net amount owed by a borrower or guarantor following a sheriff’s sale.

One judgment.  So, as to Indiana, unlike some other states, personal liability for a judgment (against a borrower or a guarantor) for any post-sale deficiency effectively occurs immediately upon the entry of the foreclosure judgment itself - before the sheriff’s sale even takes place.  There is no second procedural step or subsequent process to establish a deficiency judgment. 

For more on this topic, see the following posts:

Full Judgment Bid = Zero Deficiency

How Much Should A Lender/Senior Mortgagee Bid At An Indiana Sherriff’s Sale?

Full Credit (Judgment) Bid in Michigan Extinguishes Debt and Mortgage in Indiana

Guarantor Wins Res Judicata Battle, Loses Deficiency War