The consequences of foreclosure are severe, including loss of houses, tax and credit issues, and tenant lawsuits. For many people, the most direct consequence of foreclosure is the need to scramble to find a new place to live. In many places, housing foreclosure may adversely affect the credit of the original homeowner, and this may cause serious financial difficulties for many years after the foreclosure occurs. To make matters worse, the former homeowner may have to deal with any debt tax forgiveness. Landlords who lose their homes or buildings for foreclosure may also have to deal with angry tenants, and they sue them for losses caused by moving before the lease expires.
Foreclosure is a public record that can be included in consumer credit reports, background check reports, and tenant review reports. The credit consequences of foreclosure not only cause difficulties for individuals who need to rent new houses, but also make it difficult for someone to obtain new credit, thereby increasing their credit limit. Or get favorable interest rates. In fact, one of the lesser-known consequences of foreclosure is that if the creditor identifies the foreclosure in the customer’s guarantee report, certain creditors will increase the debt owed by existing customers. interest rate.
Other possible consequences of foreclosure include tax debts and compensation due to tenants who have lost their homes due to the foreclosure of the homeowner. In some places, any debt cancelled in a foreclosure may be taxed, and the former homeowner may be responsible for paying a large amount of tax. If the landlord has a tenant and the tenant is forced to find a new house during the lease term, they may sue the landlord for breach of contract. In this case, defending the litigation or paying the costs of the litigation judgment will only increase the financial problems of the former homeowner.