Facing foreclosure is stressful enough, but many homeowners are surprised to learn they might still owe money even after losing their property. In Nevada, lenders can sometimes pursue what’s known as a deficiency judgment—a legal action to recover the difference between the loan balance and the foreclosure sale price. Understanding when and how deficiency judgments apply is crucial if you are dealing with foreclosure. Working with an experienced Las Vegas foreclosure lawyer can make a major difference in protecting your financial future.

What Is a Deficiency Judgment?

A deficiency judgment occurs when a foreclosed property sells for less than the amount owed on the mortgage. After the sale, the lender may sue the borrower for the "deficiency"—the remaining balance not covered by the sale proceeds. For example, if you owed $300,000 on your home and it sold at auction for $250,000, the deficiency would be $50,000. Unless specific legal protections apply, the lender could potentially seek a court order requiring you to pay that amount.

Are Deficiency Judgments Allowed in Nevada?

Nevada law does allow lenders to seek deficiency judgments, but with important limitations. Whether a lender can collect depends largely on the type of foreclosure and the type of loan involved.

There are two primary types of foreclosure in Nevada:

Non-judicial foreclosure: Most common. Happens outside of court based on a deed of trust.

Judicial foreclosure: Occurs through a court process.

In non-judicial foreclosures, Nevada protects homeowners by limiting deficiency judgments through NRS 40.455 and related statutes. Generally, if the lender wants a deficiency judgment after a non-judicial foreclosure, they must file a lawsuit within six months after the foreclosure sale.

In judicial foreclosures, the lender typically requests a deficiency judgment as part of the court case.

Limits on Deficiency Judgments in Nevada

Even when allowed, Nevada restricts the amount a lender can recover. Under Nevada law, a deficiency judgment is limited to the lesser of:

The difference between the outstanding loan balance and the property's fair market value at the time of sale, or

The difference between the loan balance and the actual sale price.

Additionally, the lender must consider factors such as whether the borrower has already satisfied part of the debt or whether there are any offsets.

There are also specific loan types where deficiency judgments are prohibited:

If the loan was used to purchase a single-family primary residence.

The borrower did not refinance the loan after purchase.

The lender was the original lender (not a third party who purchased the loan later).

If all of these conditions are met, Nevada’s anti-deficiency laws may fully protect the borrower from having to pay any deficiency.

How a Las Vegas Foreclosure Lawyer Can Help

Deficiency judgment laws are complicated, and lenders often aggressively pursue borrowers for leftover balances. A skilled Las Vegas foreclosure lawyer can help by:

Analyzing your loan documents to determine if you qualify for anti-deficiency protections.

Challenging the lender’s valuation of the property if it is unfair or inaccurate.

Negotiating with the lender to settle the debt for a reduced amount.

Raising defenses in court if the lender files a deficiency lawsuit.

Helping you file for bankruptcy if needed to discharge the debt.

Without proper legal help, borrowers can be caught off-guard by a judgment that impacts their wages, bank accounts, and credit for years.

Timing Matters: The Six-Month Rule

If a lender wishes to pursue a deficiency judgment in Nevada, they must act quickly. State law gives lenders only six months from the foreclosure sale date to file a lawsuit for a deficiency. If they miss this deadline, they lose their right to collect the deficiency forever. However, borrowers should not rely on the six-month rule as their sole protection. Many lenders are quick to file deficiency lawsuits, and borrowers often miss critical deadlines to respond. Consulting a Las Vegas foreclosure lawyer immediately after a foreclosure can help ensure that your rights are protected from day one.

Deficiency Judgments and Bankruptcy

If you are facing a large deficiency judgment and cannot afford to pay it, filing for bankruptcy may be an option. In many cases, a Chapter 7 or Chapter 13 bankruptcy can eliminate or restructure deficiency debts along with other unsecured debts. However, bankruptcy has serious long-term financial consequences, so it should only be pursued after careful legal advice. A knowledgeable foreclosure lawyer can review your situation and help you decide if bankruptcy is appropriate or if other solutions might be available.

What Happens If You Ignore a Deficiency Judgment?

Ignoring a deficiency judgment can lead to serious problems. Once a lender obtains a judgment, they have powerful collection tools available, including:

Garnishing your wages.

Freezing or seizing funds in your bank account.

Placing liens on other property you own.

These actions can devastate your finances. Additionally, deficiency judgments appear on your credit report, making it harder to secure housing, employment, or future loans. Prompt legal intervention can often prevent or mitigate these consequences. If you receive notice of a lawsuit or judgment, contact a Las Vegas foreclosure lawyer immediately.

Conclusion

Dealing with foreclosure is overwhelming enough without the added burden of a deficiency judgment. Fortunately, Nevada law provides important protections for many homeowners, especially if the right legal strategies are put into place early. If you are worried about a potential deficiency judgment after foreclosure, don’t wait. The sooner you consult a qualified Las Vegas foreclosure lawyer, the more options you may have to limit your financial exposure and protect your future. Contact an attorney today to schedule a consultation and get the help you need.