One of the greatest fears that a person has when facing foreclosure, other than the fear of losing their home, if the long-term effect of the foreclosure on their financial life, especially their credit score and employment. Generally, homeowners do not have a choice when it comes to whether or not they are going to lose their homes, even in cases of voluntary default where a homeowner may be choosing default as the lesser of several evils. Therefore, these financial consequences may seem like more punishment on top of a bad situation.
Credit scores are based on a person’s credit history, which involves looking at the debts a person has and his or her ability to pay on their bills. In most cases, a person has a good credit score if they carry relatively low debt and have a solid history of making on-time payments on their bills. Credit scores are important because they affect creditors’ choices when deciding whether to offer credit to a person.
When a person goes through foreclosure, usually after missing several mortgage payments, it does negatively affect a person’s credit score. Short sales and even deficiencies can also be reported on a homeowner’s credit history and also have negative effects. A foreclosure stays on a person’s credit history for seven years. Immediately after the foreclosure, it may be difficult for the homeowner to rent or buy another home, buy a car, or open other lines of credit. If creditors do extend credit, it may be at higher interest rates. However, depending on what the person’s credit score was before the foreclosure, and on what other debts and missed payments they have, the damage may not be that bad. In addition, it is possible for a person to rebuild their damaged credit score over time. One of the best ways to rebuild credit is to pay any remaining bills on time. Although living with family members during a time of transition is not an option for everyone, those who can should temporarily living with family members, among other money saving ideas in order to save money and stay up to date with other bills during the transition period.
Some employers do review prospective employees’ credit histories as a way to assess personal responsibility, self-control, and good judgment. In some fields, a person’s credit history can affect their security clearance, which can in turn affect employment. For these reasons, a foreclosure may affect a homeowner’s employment prospects, especially in the military and government arenas. An employee who already has security clearance may lose it after going through foreclosure, and subsequently lose their job. This can be a devastating blow to an employee who just lost his or her home. Therefore, if it is at all possible to negotiate with the mortgage lender to avoid foreclosure, the homeowner should pursue that option.
Contact An Experienced Foreclosure Defense Attorney
If you are facing foreclosure, it is important to seek an experienced foreclosure defense attorney to protect your interests. Contact the North Miami foreclosure attorneys at Charlip Law Group, L.C. for a consultation on your case. We are happy to help you today.