What term describes the remaining debt after a repossession?

The term that accurately describes the remaining debt after a repossession is known as a deficiency balance. This occurs when the amount received from the sale of the repossessed asset is less than the outstanding amount owed on the loan or credit agreement. For instance, if a vehicle is repossessed and sold for $10,000, but the borrower still owes $15,000 on the loan, the borrower would have a deficiency balance of $5,000. This balance represents the obligation the borrower still needs to repay despite the asset being taken away.

Understanding deficiency balances is important in the context of financial counseling because they can lead to further financial strain for individuals who may already be facing hardship. Additionally, creditors may pursue collection efforts for this remaining debt, which can impact a borrower's credit score and financial well-being.

The other terms do not accurately describe the situation following repossession. For example, a residual balance typically refers to the remaining value of an asset or account after certain deductions, and an outstanding debt is a general term that does not specify the context of repossession. A surplus balance suggests that there is more collateral than debt owed, which is not applicable in a repossession scenario.