A graduate of Seton Hall University School of Law, attorney John Anastasio has become an advocate for consumers in the areas of foreclosure defense and bankruptcy law at the Law Offices Of John Anastasio in Stuart, Florida. In this piece, he discusses the ways in which a foreclosure can negatively impact a person’s credit rating.
In many cases, having a foreclosure on your credit report can actually look worse than a bankruptcy. Whereas a bankruptcy will wipe everything out, a foreclosure will stay there and hurt a person’s chances of getting another mortgage for years in the future.
If you have got a deficiency judgment, as well as the foreclosure, then you could be looking at 20 years before your credit goes back to normal. During that time, lenders are not going to be in any rush to give you money simply because you have an outstanding deficiency judgment sitting on your record. That is the No. 1 way that a foreclosure will impact a person’s credit score.
Although a foreclosure itself is only going to stay on a person’s credit report for about seven years, it can actually be more hurtful during than time than just a simple bankruptcy. During those seven years, the lenders and all sorts of companies that look at your credit report to make judgments about you are going to be seeing your record as highly unfavorable. That’s just the way they look at it.
Having a foreclosure on your credit report can hurt your job prospects, too, since some companies will shy away from hiring someone with such a massive debt burden—with the deficiency judgment—hanging over their head. For those people who work in the defense industry, for example, having a deficiency judgment could theoretically make them more susceptible to doing crazy things for extra money. At least that is the way that some employers look at it.
So for some people, obviously depending on the situation, bankruptcy could end up being the better option than a regular foreclosure. The reason for that is just because the bankruptcy would wipe out the deficiency judgment and allow the homeowner to essentially have a fresh start on his financial life.
There is not much worse in the world for people than a foreclosure judgment or the deficiency judgment. If you have got a lot of debt, nobody is going to want to loan you money—even if your credit history was sterling up until this one point. So right there, you are going to have problems getting another mortgage or loan in the future.
Because home foreclosures can have so many reaching aspects into various areas of the person’s life, it is really important that anyone facing a foreclosure contacts a competent attorney who is qualified to help in this type of situation. That is going to be your best bet for avoiding a financial disaster.
