The Indiana Court of Appeals recently held that creditors must move for an in personam remedy in the original foreclosure judgment or forfeit their right to collect deficiency funds. In Elliott v. Dyck O’Neal, the bank foreclosed upon a borrower’s residence, and sought judgment against the borrowers for the full amount of the outstanding balance in the complaint. The motion for default judgment, and accompanying order, however, only sought an order in rem for the outstanding debt—omitting any mention of an in personam remedy.

The judgment was eventually assigned to a third party creditor, who sought to collect the deficiency balance through wage garnishment. The Indiana court held that the judgment creditor was not entitled to collect any deficiency from the borrower due to the failure to seek proper relief in the judgment. More significantly for those seeking to recover deficiency funds, the court also held that the third party creditor was required to refund all monies it had collected from the borrower related to the deficiency—as the judgment order did not allow for collection against the borrower personally.