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Metallic glasses deformed in an inhomogeneous manner show degradation of structure-sensitive soft magnetic properties. Ribbons of different magnetostriction have been magnetically measured in the as-cast and in the cold-rolled state. Subsequent isochronal annealing and retesting indicates that recovery of magnetic properties may be rationalized on the basis of competition between stress relief and incipient crystallization, both of which occur during annealing. The minimum coercivity to which an inhomogeneously deformed sample may be annealed is limited primarily by magnetostriction and thermal stability of a particular metallic glass. Stress relaxation and Curie temperature measurements suggest the creation of free volume during the formation of shear bands.