When your lender decides to foreclose on your home, it’s easy to feel like the world is ending – but a foreclosure doesn’t mean that you’ll never be eligible for a mortgage again. There are plenty of steps that you can take to get back on the right financial track, if you’re willing to work hard enough. Here are three things you can do now.
1) Understand your rights. Although your lender will hound you to pay your mortgage even after they foreclose on your house, they can only pursue your debt within the bounds of the law. Under the Fair Debt Collection Practices Act, a lender isn’t allowed to call your house outside of business hours, inform your employers of your debt or otherwise harass you into paying. If they try any of these underhanded tactics on you, find a lawyer and take them to court.
2) Use your credit cards. If you still have credit cards open after your foreclosure, then you should make sure to use them as often as possible. You might not have much money, but spending a little and paying it off in full every month will help pull your credit rating out of the well. If you use the cards responsibly – in other words, if you don’t carry a balance – your credit rating will improve markedly after the foreclosure on your credit score expires.
3) Hound your lender to clear your credit score. In some cases, harassing a lender as much as they harass you can be a good thing. If you call, send emails and write letters to your lender every day demanding that they remove your foreclosure from your credit score, you might bug them enough that they’ll clear your credit rating just to get rid of you. Remember, though, that if you’re going to try this, it’s important to stay within the boundaries of the law – just one overzealous message could land you in court.
Surviving a foreclosure isn’t easy, but it isn’t impossible either. After seven years your foreclosure will be removed from your credit score, so use the time wisely to build up a solid credit rating through responsible credit card use, and don’t be afraid to sue your lender if their collection practices start getting unethical.
