Foreclosure in Lowell is the same foreclosure we hear about in the other districts in Massachusetts. It is a legal process through which a lender can be able to close the loan contract on a defaulting borrower, confiscate the property and sell it an auction and utilize the proceeds to compensate the debtor’s outstanding balance. Well the topic seems like it should just be disadvantages nonetheless, even with the stressing event it has a couple of merits especially if it’s about a home that your family can no longer afford to make the monthly dues.

Advantages of foreclosure

Increase in your disposable income; After foreclosure the mortgage contract will no longer be operational and you will no longer be required to continue making the mortgage monthly installments, thus translating to reduced monthly obligations which mean you will be in a position to have a lifestyle you can afford meeting other obligations without much struggle helping you start rebuilding your credit and finances.

Ability to Moving On; Foreclosure marks the end of mortgage obligation which gives a borrower a sense of closure allowing him/her to relocate to a new environment, where they can start a fresh by carefully realigning their priorities so to rebuild their credit worthiness.

Disadvantages of foreclosure

Credit score; The credit score is the most affected when it comes to foreclosure, usually in a negative manner; this is so because first it appears on your credit report seven years, thus making it difficult and costly to acquire credit in the future. Secondly, after foreclosure you stand to lose at least 100 points of your credit score. Thirdly, where employers consider your credit report before hiring, you may be disqualified as they may deem that you will not make an effective employee as compared to a person who has no overwhelming debts. You may also have a challenge in finding a rental space where you might be required to convince the landlord that you will be able to make payments.

Deficiency Judgments: The most disturbing fact about a foreclosure is that besides you losing your home, your lender can still come after you for the difference between what you owed and the proceed from the foreclosure sale if the former was greater than the later, because it does not completely clear your liability to pay the debt. If the lender has managed to acquire a deficiency judgment against you, the only way to do away with it is to file for bankruptcy.

Taxation: Foreclosure has tax implications that accrue since the tax authority(s) (IRS) consider unpaid debts as an income to the borrowers commonly referred to as cancellation of indebtedness income, meaning that foreclosures and short sales may be followed by a huge tax bill.

Lastly the above disadvantages are financial more like effects of foreclosure, therefore it will be inappropriate to leave behind the emotional/ esteem problems foreclosure causes especially after been forced out of your home stigma and/or shame may result from that incident; transferring your children to another school(s) thus disrupting their livelihoods.