Purchasing a home is one of the most exciting times in a person’s life. While it is a major financial investment, it represents much more than that for the security, stability, and future of homeowners and their families. Unfortunately, life is not free of hurdles or challenges, and some people find themselves unable to make their mortgage payments. Whether this is because of a bad loan, unforeseen circumstances, or changes in financial status, the ultimate result of failing to make home payments is foreclosure.
The Effects of Foreclosure
· Foreclosure results in a significant hit to a person’s credit score. In fact, it can drop a credit score by hundreds of points. The impact of this cannot be understated as this drop in credit score can take years to rehabilitate. In addition, the lower credit score can mean that the person will have difficulty borrowing money, or will have to pay a significantly higher interest rate than other people. This creates a financial spiral that can be hard to get out of.
· Foreclosure can impact a person’s ability to buy another home. When lenders look at a person’s credit history, they look carefully for indicators that a borrower will not be able to pay their mortgage. A history of foreclosure is a big red flag, and some lenders will not approve a home loan for at least five years.
· There are significant tax implications to foreclosure. A common result of foreclosure proceedings is that a borrower’s remaining debts or deficiency are forgiven or cancelled. While it sounds nice to no longer have that outstanding debt, it is important to understand that the IRS treats this forgiven debt as taxable income.
· Foreclosure takes a mental and emotional toll on the borrower. The prospect of foreclosure can be intimidating, stressful, embarrassing, and exhausting. In short, foreclosure can have very real psychological effects on individuals and families. It is critical for borrowers facing foreclosure to recognize this and seek appropriate help.
While the aforementioned effects of foreclosure sound daunting, take comfort in the fact that foreclosure proceedings are relatively common and that borrowers have legal options. If you are concerned about an impending foreclosure, it is critical that you speak with an experienced attorney as soon as possible to seek some relief.
Let Levitt & Slafkes, P.C. Work For You
If you are having trouble keeping up with your mortgage or are facing impending foreclosure of your home, you are not alone. At Levitt & Slafkes, P.C., we have provided over thirty years of accurate, relevant legal counsel to our clients. Foreclosure may seem like an overwhelming prospect, but we want you to know that you have options. We will listen to you, describe your legal options, and advocate for your legal rights. Let us help you obtain some relief. Contact Levitt & Slafkes, P.C., at (973) 323-2953, or reach us online to schedule a free consultation.
We are proudly designated as a debt relief agency by an Act of Congress. We have proudly assisted consumers in filing for Bankruptcy Relief for over 30 years.