What Are Negative Consequences of Foreclosure?
Losing a home means more than losing your small piece of the American Dream. There are also many negative financial consequences that could have repercussions long into the future. If at all possible, most people would benefit from avoiding a foreclosure.
At Nowack & Olson, we understand that sudden job loss and medical crises can knock the feet out from anybody. One of the worst things is to lose a home, so our South Florida foreclosure defense attorneys have helped many homeowners work something out with their lenders.
Below, we highlight 3 of the worst consequences of foreclosure. Please contact our law firm if you have questions.
Your Credit Is Shredded
Missing monthly payments certainly harms your credit score, but there is nothing quite like the drop your score experiences after the court enters a judgment against you. Many of our clients see a 200- point drop, or more, at this point.
Someone with a credit score in the 700s could suddenly fall to the 500s or even lower. With weak credit, it is much harder to obtain credit in the future or even find a place to rent, since many landlords pull a credit check. If they see a credit score in the 400s, they might slip your apartment rental application into the trash can.
For this reason, considering a Chapter 13 bankruptcy often makes sense. You can catch up on overdue mortgage payments and still stay in your home. If you stick to the payment plan, you can slowly rebuild your credit and get back on track.
You Might Lose Out on Jobs
Like landlords, many employers check an applicant’s credit history, and they might reject you based solely on your poor credit. This is particularly true if you need to work with money as part of a job. You can try to take the sting out of the foreclosure by bringing it up in the job interview, but many employers might never even call you in to talk about the job opening.
You Might Still Owe the Bank Money
Even if your lender forecloses on your home, you could still find yourself owing a hefty sum of money as part of a deficiency judgment. This is the difference between the home’s value and the amount owed to the lender, plus attorneys’ fees and costs. If your home is only worth $150,000 but you owe $180,000, you could be on the hook for the $30,000 difference.
Foreclosure does not automatically create a deficiency judgment against you. A lender has to file a complaint in court, which you can fight. Even if granted, you might try to get discharged some other way, such as through bankruptcy. Not all foreclosures result in deficiency judgments, but it is often a possibility.
Tackle Financial Challenges Head On
If you see foreclosure looming on the horizon, you should meet with a Plantation bankruptcy lawyer at Nowack & Olson today. We can help you strategize a response, which will hopefully minimize the negative financial consequences. Time is of the essence, so call 888-813-4737 today. We offer a free initial consultation.