Sometimes, a house becomes too expensive for its owners to continuing living in and paying the mortgage. Changes in income can make what was once affordable now unmanageable. Problems with a house or mortgage terms can push the cost of ownership beyond one's means. Sometimes, there are opportunities to work things out the mortgage. Other times, the smart decision is to walk away from the house and allow the bank to foreclose.
A deficiency balance exists when a secured creditor liquidates their collateral (e.g. forecloses a house or repossesses and sells a car), but the proceeds of the sale bring less than the debt owed. In many cases, the creditor can seek to recover the balance of the debt as a deficiency. A deficiency balance is one major type of unsecured debt, generally subject to discharge.