Losing a home to foreclosure is like breaking up. You‘re out of the relationship, and it feels like you will never love again. Similarly, starting over after a devastating foreclosure seems just as daunting and impossible to many distressed homeowners. But believe it or not, there is life after foreclosure and there are many ways to rebuild and start anew. Despite all the hurdles that can possibly come your way, here are three ways to help cope with those hardships and move on with your life.

  1. Axing the taxes.   Unfortunately homeowners can receive a bill for taxes on the amount of mortgage that the bank wasn’t able to get back from the property sale after losing a home. Even if debt is “forgiven” it can still be taxed and considered to be income by the IRS. However, there are some instances where this won’t apply. Sometimes the IRS will allow taxpayers to get out of paying a bill if they’re unable to pay debts. Congress also passed relief for foreclosed owners who lost their main residence and didn’t have a cash-out refinanced mortgage.
  2. Give me a little credit. The number of people who have damaged credit because they could not pay their home loans keeps growing. Since the start of 2007, nearly 2.8 million homeowners have gone through what is broadly referred to as a “distressed sale,” according to research firm Core Logic (www.npr.org). If a foreclosure is an the only bad instance on a stellar credit record, the homeowner might be able to rebuild their credit record and negotiate better credit card rates in two years.
  3. Homeward bound. Owning a home after foreclosure is challenging but obtainable. Homeowners may have to wait up to five years if they’ve made bad debt decisions. However, if a homeowner can explain special circumstances such as catastrophic illness or job loss there’s a chance they would only have to wait three years to be able to apply for another home loan.

Remember;  the best way to rebuild life after foreclosure is to learn from your mistakes, work on improving your credit score, and eliminate debt.

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This is filed under Foreclosures.

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