Can Anything Be Done After Foreclosure?
A homeowner's journey through the foreclosure process doesn't end when the home is auctioned off and the gavel drops. Depending on the laws in his state, a homeowner may have to wade through legal actions taken by his former lender to recover the balance on his mortgage or other creditors seeking to obtain a debt judgment against him. A homeowner may also be able to make one last financial effort to keep his home.
Other People Are Reading
-
Right of Redemption
-
Some states allow a period of time after a homeowner is foreclosed; this is known as the right of redemption. This time provides the homeowner an opportunity to pay his lender the amount of the home sold for at auction plus the lender's legal costs in exchange for keeping his property. This can be quite a substantial amount of money, and it's rare a homeowner is able to come up with that kind of lump sum payment all at once. The total time available to invoke a right of redemption varies by state.
Deficiency Judgments
-
Your lender also has options to pursue you after foreclosing on your home. Some states in the United States allow what is known as a deficiency judgment. This enables your lender to sue you if the amount the lender receives for your home at auction does not cover the balance on your mortgage. For example, if your mortgage is valued at $150,000 and your lender only obtains $100,000 for your home at auction, you may be sued for the difference of $50,000.
-
Bankruptcy After Foreclosure
-
If you are being targeted by your mortgage lender for a deficiency judgment or by other creditors for debts in the wake of your foreclosure, bankruptcy may be your only option. Chapter 7 bankruptcy can expunge your unsecured debts while liquidating some of your remaining assets to pay off some of your creditors. Chapter 13 bankruptcy can restructure your remaining debts and allow you to pay them off over a short period of time before expunging the remaining debt. Either form of bankruptcy grants you an automatic stay, which prevents creditors from continuing collection practices against you while your bankruptcy is in process.
Repairing Your Credit
-
A foreclosure can severely damage your credit rating making it difficult for you to secure new lines of credit including credit cards and personal loans. Rebuilding your credit after a foreclosure requires methodical planning and diligent attention to your finances. It's of the utmost importance to pay all your bills on time and keep the revolving balances on your existing credit cards low or nonexistent. If you don't have a credit card it may be a smart option to apply for a secured credit card. This type of card requires a down payment for an extension of credit. Making small purchases with this card and paying the balance off each month can start you on the path to financial recovery.
-
