Getting Back On Track Of Your Credit After Losing Your Home

By Author: Nick Adama
Total Articles: 197
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As a lot of you might already know, your bank will not accept your payments during the foreclosure process. The reason your bank will not accept your payments is because they need to either be paid in full for all the money owed, or an acceptable workout plan needs to be agreed to. If they accept your payments otherwise, you would have a legitimate excuse to dispute the foreclosure in court, using the defense they they agreed to a lower payment. Your documentation would be the payment they accepted that was less than the amount owed. So, for those of you that have not had a payment sent back yet, be ready. Most home onwers in foreclosure live in their home for 3-24 months without making a single loan payment, before getting evicted.

To help you better understand the foreclosure process, I'll quickly review the 4 basic steps of foreclosure. These are not 100% correct for every state, but I've tried to present these to be as accurate as possible for every state.

The beginning step is the filing of the foreclosure lawsuit or lis pendens, or other formal and public notification of the delinquency. Often this happens ...
... after three missed house payments.

Second is a court case for you to defend yourself against the foreclosure in the event it was carried out illegally. There are several legal foreclosure defenses and virtually unlimited ways to remain in your home, if you comprehend the court process and use it to your advantage. This step may need to be initiated on your part if you are in a non judicial state.

Step Three in the foreclosure process is the auction or sheriff's sale. This is when the house is sold at auction to the highest bidder. Many people believe there are actually people bidding at these auctions and someone else is going to buy their home; this is usually not the case. At the sheriff sale, the highest bidder is usually a representative from the bank or real estate agent. In almost every case we see, the bank gets the home back and it becomes a REO (Real Estate Owned) listing for the bank. After the sale, your bank will own the home and they will try to sell it as quickly as possible.

In some states, there is a redemption period, either before or after the sheriff sale. In these states, foreclosure victims are allowed up to 1 year to get their home back, depending on the local rules. To redeem the home, the homeowner must come up with enough money to purchase the home from the lender for the total amount owed. In some cases, the previous owner may get the home at a reduced price, or even by just paying the total arrears.

The last step in foreclosure is the eviction. This is when you will be forced to exit your home. It's usually best to leave before the eviction process, because if you don't, the local sheriff and an eviction crew will show up and forcefully throw you and your possessions from the property. Most states require a min. of three day notice before eviction and some require a 7, 10, or 30 day notice.

During the foreclosure process, foreclosure victims should be working with their bank to try and arrange a loan modification. This is when the terms of the loan are permanently changed to make the loan more affordable. Because of loan modifications, many foreclosure victims are able to save their home and get a more affordable payment. If your bank does not work with you on a modification, don't be afraid to hire a professional negotiator to do it for you. Trying to get a loan modification without help can be very frustrating, time consuming, and can cost you a lot more money in the long run. A negotiator can get you a betterpayment and can get things resolved much more quickly. Immediately stopping foreclosure and getting a lower monthly payment is easily worth the cost.

In circumstances when you are not able to afford your home, it's important try and recover from your hardship while you are in the foreclosure process. When you are not making your house payments, you should be saving as much money as possible so you can move on when that time comes. Don't spend this extra money carelessly!

If you are facing foreclosure, then it's time to take a serious look at your spending habits and determine which expenses are absolutely requiredneeded}. In nearly every foreclosure case I see, there are 100's or even 1000's of dollars spent on uncalled-for items in the monthly budget. When you risk losing your home, you don't need to keep your $200/month satellite service! You can also stop buying songs on the Internet and cancel the Internet services on your cell phone! Take a good look at each and every monthly cost and decide if your life will go on without it. If you can live without the expense and it will not jeopardize your job or your family's health, then you need to stop spending money on it!

Even if you are under the illusion that you can afford these extra luxury things, you need to get real. If you could afford them, you wouldn't be facing foreclosure! Use the extra money to pay off your credit cards, starting with the highest interest rate credit cards first. Getting out of debt will help your credit recover more quickly and when you do get a new mortgage payment, it will be a lower payment.

When you do rent or buy a new house, it's important to buy one that is affordable and will not stress your budget. You should not be living from one paycheck to the next! Make sure you have enough extra income to put extra cash away each month. You should have a min. of 20% extra income at the end of each month that goes directly to your savings/retirement account. If you get back into a situation where you are struggling each month to make a mortgage payment, you'll never be able to get ahead of the game.

These simple tips can even help you stop foreclosure, if you apply these changes soon enough. But for others, you will have to move on and get on with your life in a new home. Use this advice and get your life back on track by lowering your bills and eliminating all those frivolous and unnecessary expenses.
Nick publishes articles for the My Foreclosure Lender site. These articles provide information to homeowners facing the loss of a home, describing a number of methods they can use to delay foreclosure. The site details numerous solutions, such as mortgage modification, foreclosure loans, deed in lieu of foreclosure, filing Chapter 13, and others. Visit the site to read more about how the foreclosure process works: http://www.myforeclosurelender.com/