Question:

What are the effects of foreclosure?

Answer:

Beside the obvious effects from foreclosure mainly expressed in losing your home, there are other negative effects that could influence your life in a negative way.

Common Foreclosure Effects

  • Your equity will be lost.
  • Taxes may increase if the foreclosure sale did not cover what was owed to the lender and it counts as income to you; subsequently, you will have to pay tax on this "income".
  • You may face a lawsuit from a subordinate lien holder who was not reimbursed.

Before you ever see foreclosure pending on you, you could avoid negative foreclosure effects if you take the appropriate action. Either sign a forbearance agreement with your lender, or consult a foreclosure agency to help you avoid foreclosure.

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