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Will My Credit Be Irreparably Ruined If I Go into Foreclosure?

The short answer is no, but the more specific answer is that it will be affected for a period of time depending on the type of credit you are seeking. There is no automatic rule that says that a creditor cannot extend credit after a foreclosure or bankruptcy for a certain number of years, but a bankruptcy filing remains on a credit record for 10 years and a foreclosure remains on your credit report for 7 years. . After default, certain federal loan applications have an automatic requirement that no federal loan can be granted after a bankruptcy for a period of 3 years and sometimes longer, depending on the type of program you’re applying under.

Suffice to say that your credit score will certainly take a hit if a foreclosure is filed against you, particularly if you then file bankruptcy to stop the foreclosure. You will live with at lower credit score for a significant period of time after the filing; it depends on the type of credit you’re applying for. It’s harder to get a home loan after a foreclosure than an auto loan. There are some types of credit that are easier to get, but typically, you’ll end up paying higher interest rates for around seven years.

How Soon Will an Eviction be initiated?

The timing depends on the lender; some will go through a fairly extensive letter writing and telephone contact campaign to try to get the loan reinstated voluntarily without having to initiate foreclosure. They try to do this for two reasons; first, they hope to avoid having any more significant impact on the borrower’s credit than necessary, but also because foreclosures, once initiated, are like any other kind of professional service; they cost money, which means the lender incurs trustee’s fees to have a title company process a foreclosure.

It also depends on the economy. Back in 2008-2010, lenders were more tolerant of defaults, because many people were in default. Currently, my experience is that lenders will initiate foreclosure more quickly once a default occurs. You’ll probably have a few months before the lender will initiate formal foreclosure and sometimes longer than that. It depends largely on how much communication you have with your lender once you default. The more informed you keep your lender on your situation, the more likely the lender will be to delay the foreclosure proceeding and try to work with you on a loan modification of some sort.

For more information on Foreclosure and Credit, a free initial consultation is your best next step. Get the information and legal answers you’re seeking by calling (916) 635-0302 today.