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How to Recover From Foreclosure in New Jersey

It is common for homeowners to miss one or two mortgage payments. Sometimes, this is a minor clerical error that can be quickly corrected. Other times, the homeowner is having financial troubles and cannot keep up with their mortgage. The bank may foreclose if you are delinquent on mortgage payments for too long. Recovering from this process takes work, and it might take years.

Recovery from foreclosure can begin before foreclosure is even complete in your case. Your attorney might help you mitigate the effects of foreclosure and save some of your assets. After foreclosure, you should focus on finding a new home. For many, this means renting rather than owning a home. For others, staying with loved ones might be the next best option. Next, you should start rebuilding your credit. This means strict budgeting and using lines of credit more strategically. You should also adjust your monthly budget to live below your means, allowing you to save more and stay ahead of your debts.

Call our New Jersey mortgage foreclosure defense lawyers with Young, Marr, Mallis & Associates at (609) 755-3115 and get a free review of your case.

Mitigating the Consequences of Foreclosure in New Jersey

You can and should think about how you will recover from foreclosure before the foreclosure process is over. One possibility is to enter New Jersey’s loss mitigation program with our New Jersey mortgage foreclosure defense lawyers. Some people use the program to negotiate with lenders and creditors and avoid foreclosure. Even if you cannot avoid foreclosure, you might minimize its impact on your life. For example, you might come to agreements with lenders regarding late fees or other costs that you cannot afford so that you can save some money throughout the foreclosure process.

You should also consider filing for bankruptcy. Some people can save their homes by filing for bankruptcy. Others might only slow the process down a bit. Even if bankruptcy cannot stop the foreclosure, it might help you reduce or wipe out some of your debts so you will be better able to get a fresh financial start when everything is over.

Finding a New Home After Foreclosure in New Jersey

Can you buy a new home after foreclosure? The odds are not good. Most of the time, people who have gone through foreclosure must wait about 3 to 7 years before they can even apply for a conventional loan. As such, buying a home might not be an option. Instead, renting might be the way to go.

However, even renting can be difficult after foreclosure. The recent foreclosure and its impact on your credit score might prevent you from renting a decent home or apartment. This may depend on numerous factors, including the landlord’s preferences, the cost of renting, and even the neighborhood you want to live in.

If renting or owning a new place is impossible, staying with loved ones might be your next best option. Do you know someone with extra space or a spare room? Maybe someone in your family owns a rental property and can work out a good rent price. While accepting favors from loved ones is not always ideal, it can help you save money while repairing your credit so that one day, you can move into your own home again.

Repairing Your Credit After Foreclosure in New Jersey

Do you have any existing lines of credit? If you do, keep your balance low for as long as possible. Generally, keeping usage below 30% is ideal. It might be difficult to open new lines of credit right after going through foreclosure, as creditors might not extend lines of credit to people who have experienced financial hardship.

You likely cannot repair your credit if you do not have credit. For some, their first instinct is to cut up their credit cards to prevent themselves from falling into debt again. However, this is not always a good idea. If you only use cash to pay for everything, your credit score may not improve much. Building credit is all about having debt, managing it well, and paying it off promptly. In a way, you need to have at least a little bit of debt in order to repair your credit after foreclosure.

If you have too many credit cards or other lines of credit, you might want to consider scaling back. This may remove the temptation to spend. A good strategy is to have only a few credit cards, maybe only two or three. Use one for ordinary daily expenses, one for emergencies, and one for something like rent or car repairs. Take a step back, examine your spending habits, and consider how many credit cards you need to survive.

How Budgeting Can Help You Repair Your Credit After Foreclosure in New Jersey

To effectively fix your credit after foreclosure, you must analyze your spending habits and make adjustments. It is wise to reduce spending in this situation, even if your income can support greater spending habits. A good rule of thumb is to live below your means after foreclosure and work to build healthy savings.

Take stock of necessary expenses you cannot cut back on and make sure your budget and income cover them. Rent, utilities, credit card payments, and other important bills must always be paid every month. Figure out the total value of these costs and always make sure that money is set aside. Sometimes, this might leave little money for luxury costs, like dining out or engaging in hobbies.

Reduce unnecessary spending as much as possible. If you like to go out to eat, take vacations, go to concerts, or spend money on other fun experiences, you should cut back. Although it might be unpleasant, avoid doing these things for a while, or at least do them sparingly. If you cannot live without these things, plan for them in your budget. For example, each month, you can set aside some money for something fun. You can use that money for a vacation or an expensive concert once a year.

Use credit cards carefully. Plan to pay off the entire balance of your credit cards each month. If you overspend, you might be unable to pay off the whole balance, and you might slip back into old, bad habits.