After foreclosure, what is next? Exactly what happens after
foreclosure? Do you know what to expect and what are the best actions
to take to get your life back on track?
If the end result of your situation is foreclosure - whether
it was voluntary or involuntary, don't despair...there is life after a financial disaster...a good life.
Going through foreclosure is such an emotional and traumatic
process, that by the end, many homeowners actually experience a great
sense of relief once it's over. You can finally put it behind
you and look forward to your new life without the shackle of a mortgage
loan you could no longer afford.
So what happens next?
Here are 8 Steps to
Bootstrap Your Life After Foreclosure
on a fresh new
1. Back on Track Mindset
First and foremost, clear yourself and anybody else of the
mistakes made in the past that brought on the foreclosure.
It's all history at this point. You can't change
it. You did the best you can for youself and your family.
You can only learn from it and do everything you can to
prevent the same mistakes from happening in the future.
The peace of mind that comes from liberating yourself from house
payments that have been dragging you down is, just like the commercial
says, "priceless". You literally feel the weight
sliding off your shoulders and it is exhilirating to explore all the
possibilities of your new found freedom.
Perhaps the American dream was overrated and oversold - especially when
it dragged you down into financial distress and mental and emotional
anguish. Now that you know the pitfalls, you will be better
equipped to handle your next opportunity to pursue a new American
dream...one where what matters most are your happiness, health, family,
"In life, it is not what we
achieve that matters. It is what we overcome that matters."
- Tiger Woods (spoken wisely after he
apologized for his "transgressions")
2. Do a Post-Mortem
This sounds a bit morbid, but what I mean is, as part of the "learn
from your mistakes" process after foreclosure, force yourself to
acknowledge all the
reasons that led to the foreclosure. In fact, grab a pen and
paper and write them down -- overspending, making poor
decisions, ignoring the warning signs, gambling, substance abuse,
playing the blame game, poor budgeting, overindulgence, keeping up with
the Joneses, etc.
Use this opportunity start a new plan, educate yourself on a
disciplined financial strategy, then commit to it...and before you know
it, you will not only be back on track, you will be at the top of your
game - wiser, happier, and at peace with yourself and the world.
3. Be Accountable
Most of us have a hard time holding ourselves accountable.
It's easy to give yourself some slack ... too much slack in
fact, that most end up in a perpetual ground hog day of "I'll start
In order to effect change and necessary lifestyle changes, you must
have a coach or a partner who will hold you accountable. If
even the best Olympic athletes must have a coach, then let alone us
ordinary human beings who are not subjected to the same rigorous
training for top performance and results.
No matter what happens after foreclosure, it is imperative that you partner up with someone
who can hold you accountable. It could be your significant
other, a close family member, or a colleague.
- Create a budget together.
- Develop a path to achieve your financial goals.
You must have a road map to get to where you want to go if
you've never been there. You can do this by creating a one
year chart starting with where you are now and where you'd like to be
at the end of one year. This will keep you updated with your
progress and keep you moving through all your personal and financial
milestones you set to achieve. Repeat this every year.
Nothing will feel as good as seeing real progress and moving
closer to your goals.
- Practice good habits together - Dilligently keep track of
your cashflow coming in and going out. Living simply and
within your means will guarantee peace of mind.
4. Don't Be Shy - Ask for Help from Friends and
You will know who your true friends and family are after foreclosure.
They are the ones who tried to help and support you before
and during foreclosure and are still there afterwards.
- They will be your best source of emotional support, love,
and encouragement. You will need all the positive energy they
can give you at one of the lowest moments of your life.
- These are also the people who can extend a helping hand in
the form of a temporary loan or even a job.
- They can pitch in to help watch your children if you have
to take on an extra or part-time position.
- They can help you move to a new place.
- They can even provide a place for you to live temporarily
during the transition.
5. Moving to a New Place
After foreclosure, whether you decide to stay in the same neighborhood
or not, you will
need to find a new place to live. Consider your options of
moving to another city or even out of state where the quality of life
is good, but the cost of living is less. You may have to look
for a new job, so that's one of the considerations you have to think
The quality of the public schools (if you have school-age children),
weather, community services and amenities, affordable housing, and a
good local economy are just some of the other things you have to take
into consideration. Do some research online or at your local
public library as to which towns or cities have the best of all the
criteria you are looking for. Several magazines like Money
Magazine publish their Top Ten picks yearly so that's one resource.
one thing that could affect your ability to rent after foreclosure is
your tarnished credit. As you alreaddy know, foreclosure
black mark on your credit report for at least 7-10 years. You
have to explain your situation in writing and in person to
your case to a new landlord. If you can demonstrate that you
able to afford the monthly rent and can convince them that the
foreclosure was a result of extenuating circumstances which will not
affect your ability to make your rent payments every month, you'll have
a good chance. Your new landlord has not likely been hiding
a rock recently and knows the state of the economy and the millions of
homeonwers experiencing the same foreclosure predicament.
people who have had to downsize or move into an apartment after
foreclosure have been able to recognize the positive aspects of their
new living space:
- Much lower housing expense for rent vs their former
mortgage payments + property taxes + insurance
but inexpensive apartment complexes have well maintained grounds that
include swimming pools, jaccuzzis, exercise gyms, and club houses (kids
love these amenities)
- When something breaks in your rented
house or apartment, you can call your landlord or property manager to
fix it at no cost to you.
- More disposable income to pay
off other bills, and spend more on quality living like family
vacations, extracurricular and enrichment activities for yourself and
- Less space to clean up. This one's my personal favorite!
more importantly, much less stress and anxiety over not being able to
afford your living expenses. Peace of mind allows you to
soundly at night, knowing you can provide for your family.
After you've secured a new place to live, get started with credit
6. Restore Your Battered Credit
your credit scores after foreclosure is probably the equivalent of
wincing at a gory movie. It's okay. Your credit is
repairable! First, you must learn how your credit score components
impact your credit score so you know what to work on.
There are 2 ways you can get your credit restored
- Do it yourself
- Doing your own credit
repair is entirely doable. Click here to learn how to start credit repair
after foreclosure, and free credit repair tips.
a Credit Repair Company - If you have the extra funds to
professional to help repair your credit, please be sure to research
prospective companies thoroughly and make sure they can do the job for
you in a timely manner. Again please go to the credit repair
section for a thorough coverage of this topic.
7. Cutting back on your Expenses and Living Costs
when you were in college and you were sooo poor, you probably ate Top
Ramen for breakfast, lunch and dinner? And yet you were sooo
happy and carefree, embracing life with so much gusto and fervor
(well...commensurate to how much beer you've consumed). Life
so much simpler back then -- no mortgage payments, no kids, no debt, no
money, no furniture, no car, no obligations but to make sure you pass
your classes and graduate! And then life happened....
not all of us have the desire to relinquish all our worldly attachments
and run off to a Tibetan monastery to search for complete detachment
and enlightenment. Nor do you need to become a penny pincher
lead a life of austerity and complete depravity. There is a
simple and time tested strategy: Live
within your means!
You must adjust your spending according to your income
after foreclosure. And make sure you save at least 10% of
you make. That's it!
8. Finding Ways to Increase Your Income and Earning
On the flipside of cutting back on your expenses, you can find ways to
earn more after foreclosure.
Debt Collection Laws
from After Foreclosure
- If you have the time and energy, you can find a second job
to earn additional income.
your company pays for educational expenses, you can look at obtaining
certifications or an advance degree that would advance you to the next
level in your position as well as your pay scale.
- Additional family members living with you could also look
for employment so they can contribute to paying bills.
- You can volunteer to take shifts that offer
overtime or premium bonuses.
passive income opportunities. If you have other talents you
use to do freelance work, this is a great way to earn extra income.