Waive a deficiency judgment by negotiating with the lender to waive the right to seek the judgment, by making a settlement offer or by declaring bankruptcy, as Nolo explains. If you cannot afford to pay the amount owed to the lender, you can take the chance that the lender is not going to push for a deficiency judgment.
When negotiating to sell property for less than its value to settle debt, ask the lender to relinquish the right to seek a deficiency judgment, as suggested Nolo. If the lender agrees, ensure that the short sale agreement clearly states the provision. If the lender refuses to waive this right, offer to settle the amount owed for a smaller amount. The lender may agree to the lesser amount to avoid the costly and lengthy process of collecting the full deficiency amount. Additionally, negotiate to pay the new amount in installments.
If the lender obtains a deficiency judgment, file for bankruptcy to reduce or eliminate the debt, as Nolo advises. A Chapter 13 bankruptcy requires you to settle a portion of the debt, while a Chapter 7 bankruptcy relieves you of the full deficiency amount. Nolo recommends filing for bankruptcy when you have multiple debts rather than when the deficiency is your only debt.