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Effects of Foreclosure

means much more than just losing a home where one might have stayed for years. It is very much likely that the person will end up risking and losing his ‘face’, which will later haunt him for years down the road. Foreclosure is also not just another problem that has become rather common, but it has become a root for other problems as well.

There are many problems that may result from foreclosure. They include:

1) A person will face a loss of equity earned in his home. The value of his home is likely to increase every passing year. In many cases wherein the combination of the equity and the home value increase dramatically over the years, they will straight away cause the person to lose thousands to millions of dollars.

2) Taxes will no doubt increase. A lender who loses money from the sale of a foreclosed home must report the loss to the IRS. Subsequently, the IRS might require lender to report his loss of income in his next tax return. The person whose home was foreclosed may be required to pay taxes on it.

3) Borrowers who had once gone into foreclosure will face problems that would prevent him from borrowing money in the future. His future loan applications are likely to be rejected. This is due to the fact that foreclosure has the power to destroy one’s credit profile almost overnight. For at least 7 long years, a person who had faced foreclosure will be labelled as a bad credit risk on his credit report. This credit report will give him problems when he wants to rent apartments, buy cars and even limit his employment opportunities.

4) A person who faced foreclosure might face another problem soon after the foreclosure business ends – he might have problems with lawsuits. The mortgage company can go after him for damages. In all cases, ‘foreclosure’ is considered a damage. Therefore, the person who let the damage happen will be deemed responsible to pay for it.

5) Borrowers could lose their jobs. There are many employers who require their employees to maintain good if not outstanding credit histories. When they find out about employees who receive notifications of foreclosure in their mailboxes, they have the right to decide to fire the employees. If the employees are lucky, they might not be fired. However, any chance for advancement and better pay might as well go down the drain.

6) Borrowers who lost their homes to foreclosure usually face a more personal problem – loss of self-esteem and self-worth. This emotional damage is greater than it sounds. It can lead the people to have serious effects on their well-beings. Common problems that might sprout include depression, feelings of worthlessness, embarrassment, lack of motivation, and many more.

Everybody should be well aware of their financial standing to avoid the threat of foreclosure. In order to prevent the problem from continuing on and on, it is very much recommended for the people to take action if their finances begin to appear unstable.

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2 Responses to “Effects of Foreclosure”

  1. This is BS. How can a employer legally fire you for something personal like a forclosure? How does this affect ones ability to work? How can their be damages? The lender assumed the risk and should never lend more than the house is worth. THe banks should be sued for over appraising homes and for greedy lending practices. They destroyed neighborhoods with ACORN and selling homes to any idiot that came along and then they cry when the homes lose value and the owner cannot sell them to pay off their preditory loan. THey are getting tax payers bailout money and then they want the homeowner to assume all the responsibility for the problem THEY created. Everyone in America should forclose at the same time and screw these ZIONIST BANKERS.

  2. I work in the UK helping people overcome debt problems and strongly advise clients to use foreclosure as a way out when it is the right thing to do.

    Most, over 90% are genuine individuals who have had unfortunate reasons for their circumstances, which have been beyond their control.

    Many have handed the keys back for the property and when sold have been harrased for the shortfall from sale proceeds.

    When I have assessed their needs and income, it would take these people many years to overcome the remaining debt, It would continue their hardship beyond what could be considered reasonable.

    As they have no assets at this point it is probably the lowest point in their lives their credit rating will be very poor for years after any debt was repaid, its for them the best time to apply for a foreclosure and get it over and done with

    Most countries have different rules in the UK a fee is paid to the courts to cover a bankruptcy hearing and when granted the borrower or debtor will be assessed for assets and income for a 12 month period paying whatever they can, if anything during this time.

    After the 12 months is over any remaining balances to the petitioned creditors is written off and cannot be collected or pursued again. This allows the people to rebuild their lives and hopefully learn from the experience.

    We built an economy shaped on easy cheap credit, which failed us all and the consequences have to be borne for that, I have no sympathy for the banks as they did very well profit wise in the good years and now they have to learn to live with less money just as we do!

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