What Happens After Foreclosure?

This article discusses what happens after foreclosure and how to move on after a foreclosure.  It also highlights topics such as: how to rebuild your credit, renting, and obligations to other debts.

Foreclosure can turn the dream of homeownership into a nightmarish experience and it is still possible to recover from the foreclosure. If you were unsuccessful in saving your home at this point there are a few steps you can take to get your credit back and get back into another home in time.

You are one of the many victims of the housing crisis and you’re not alone in this. The most important thing is to move forward after the foreclosure and set yourself up for an improvement in your credit in the future. Right now, after the foreclosure it is hard to thing about moving forward or even to think of ever having your own home ever again, but it is possible. The following is some post-foreclosure advice:

Rebuild your credit

A lot of foreclosed homeowners forget this crucial step. Even after foreclosure you can still rebuild your credit to buy a house in the future. You can start by paying all your bills on-time, credit cards, student loans, utilities, everything.

This shows that you really are responsible with your bills. You can also, if you don’t have a credit card, take out a low interest with a low limit and make a few small charges and pay it off in full. This will build back your credit quickly.

Before reapplying for a home loan again, you will need to wait for about 2 years. Some lenders will waive that rule with a good credit score and a large down payment. If you also filed bankruptcy, that will stay on your credit report for up to 7 years along with the foreclosure. The combination of these two things can negatively affect your credit score to your financial focus should be to stay within a budget and pay your bills.


Renting has now become a great deal more difficult, but not impossible. Some landlords may want a large deposit for their trouble if they will consider it at all. Look for places that don’t ask for a credit check. In your new place, however, do pay your rent on-time always because this is another great opportunity to rebuild your credit and get a great credit reference for any future credit requests.

Obligations to other debt

Every state is different, but when your home is sold the money will go pay the taxes, the lender, liens and legal obligations, and then 2nd 3rd mortgages and if there is any money left over from the sale and the subsequent debt payments then that goes to you. However, in many cases due to falling housing prices there will be insufficient monies to pay all the debts and those debts will fall again to you.

They will have the same power and the same rights as a credit cards to pursue you for the money and interest and other fees may be accrued during the pursuit. The best thing to do is to negotiate with those creditors to see what can be arranged.