State Limits on the Collection of Deficiency Balances

Some states limit the creditor's ability to collect a deficiency in certain situations. Find out if your state is one of them.

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If a creditor repossesses your property (such as a car or major appliance) because you defaulted on the underlying loan, it may still be able to go after you for a deficiency. A deficiency is the difference between what you owed and what the creditor was able to get from selling the property (called the collateral). Some states prohibit creditors from collecting deficiency balances in certain situations. For example, Alabama does not allow creditors to go after a deficiency after repossession if you paid less than $1,000 for the property.

To find if out if your state prohibits creditors from collecting deficiency balances in certain situations, check the chart below. If your state is not listed, it doesn't place additional limits on the collection of deficiency balances after repossession. The applicable code sections are listed in case you want to read the law yourself. To learn how to look up state laws, visit Nolo's Legal Research Center.

To learn more about deficiencies and when you might owe one, see Deficiency Balances After Repossession

State


Code Section


When a Deficiency Balance Is Prohibited

 

Alabama

 

Ala. Code § 5-19-13

If you paid $1,000 or less for the collateral

Arizona

 

Ariz. Rev. Stat. § 44-5501

If you paid $1,000 or less for the collateral

California

Cal. Civil Code § 1812.5: Cal. Health & Safety Code § 18038.7

If you bought goods on installment. On purchase-money mortgage for a mobile home, manufactured home, commercial coach, truck camper, or floating home (does not include loans not used to purchase the property, such as home equity loans or refinanced loans).

Colorado

 

Colo. Rev. Stat. § 5-5-103

If you paid $3,000 or less for the collateral

Connecticut

Conn. Gen. Stat. § 36a-785(f),(g)

All repossession sales except for cars or boats with a cash price over $2,000

Dist. of Col.

 

D.C. Code Ann. § 28-3812(e)

If you paid $2,000 or less for the collateral

Florida

 

Fla. Stat. Ann. § 516.31(3)

If unpaid balance at time of default is less than $2,000

Idaho

 

Idaho Code § 28-45-103

If you paid $1,000 or less for the collateral

Indiana

 

Ind. Code Ann. § 24-4.5-5-103; § 24-4.5-1-106; 750 Ind. Admin. Code § 1-1-1

If you paid $4,000 or less for the collateral

Kansas

 

Kan. Stat. Ann. § 16a-5-103

If you paid $1,000 or less for the collateral

Louisiana

 

La. Rev. Stat. Ann. § 13:4108.2

If the seller does not get an appraisal before the sale, unless you have agreed in writing to a sale without an appraisal

Maine

 

Me. Rev. Stat. Ann. tit. 9-A § 5-103

If the amount you financed is $2,800 or less 

Maryland

 

Md. Com. Law §§ 12-626, 12-115; 63 Md. Op. Atty. Gen. 92

If you paid $2,000 or less for the collateral or the contract does not provide a right to collect the deficiency.

Massachusetts

 

Mass. Gen. Laws ch. 255, § 13J(e), ch. 255B, § 20B, ch. 255D, § 22

If unpaid balance at time of default is under $2,000 for motor vehicles and under $1,000 for other property

Minnesota

 

Minn. Stat. Ann. § 325G.22

If the amount financed was $6,900 or less

Missouri

Mo. Rev. Stat. § 408.556, §365.145

If the amount financed was $500 or less or if the unpaid balance is $300 or less

Nebraska

 

Neb. Rev. Stat. § 45-1054

If the unpaid balance is $3,000 or less

 

Oklahoma

 

14A Okla. Stat. Ann. § 5-103

If you paid $4,900 or less for the collateral

South Carolina

 

S.C. Code Ann. § 37-5-103

If you paid $5,450 or less for the collateral

Utah

 

Utah Code Ann. § 70C-7-101

If you paid $3,000 or less for the collateral

West Virginia

 

W.Va. Code Ann. § 46A-2-119

If the unpaid balance is $1,000 or less

Wisconsin

 

Wis. Stat. § 425.209

If the unpaid balance is $1,000 or less

Wyoming

Wyo. Stat. Ann. § 40-14-503

If you paid $1,000 or less for the collateral

 

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