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Managing Your Debts After You Experience a Short Sale


First off what the heck is a short sale you ask? Well, this is when a homeowner finds that they owe more on their home than what they can sell it for on the open market. This is an alternative to letting the bank foreclose on their home when they can no longer keep up the payments. This type of sale is going to hit your FICO score and it may make it hard for you to buy another home for up to a couple of years after the short sale. If you are in this situation here are some things that you can do to manage your debts once you have gone through the short sale of your home.

One of the first things you need to do is to try and get your credit score improved. The best way in which you can do this is start paying off all of your credit card debts. This is probably what got you into the major part of your debt in the first place. Do your best to stay away from those debt consolidators as well. If you go to one of them you are only going to hurt your credit score even more. You need to be able to do this on your own and not use a middle man to get the work done for you.

You will notice that right after you do your short sale that your credit cards APRs will go up and they will also have reduced your limits. You need to call your card companies and try to convince them to lower those interest rates for you. Try and explain to them about your situation and that you have lost your home. Tell them you want to be able to pay off what you owe them and not default on them. Tell them you don't want to have to file bankruptcy too and that you'd rather try and arrange something with them in order to pay off the bill. You would be surprised how much they might be willing to work with you if you are just brutally honest with them.

If you get arrangements made then you need to commit yourself to paying off the cards. The best way to do this is to just take one card at a time. Take the one with the highest interest and pay it off as soon as you can. Continue to pay the other cards but only pay small amounts on them until the one card is paid off. Do this with each card until you have all of them paid off.

Once your credit cards are paid off you need to start thinking about opening up a savings account that is designated for emergency funds only. This probably sounds hard to do but if you end up seeing that you do have some money left over each month it will be in your best interest to set this money aside and put it into your emergency savings account. If monthly is too tough try saving $2 to $5 a day off of extras you might be buying like a stop at the nearby coffee shop for example. It's a good idea to sit down and see how much money you spend on a daily basis, list all that you spend and then see what you can omit and then take that money and save it.

Another thing you can do if you find it's hard to take the money and save it yourself is to see if you can arrange with your boss to send a certain amount of money as a direct deposit into the emergency savings account. If it's money that you don't see coming on your paycheck it's going to be easier for you to learn to live without it.

Stop using your credit cards. Your best bet is to simply keep one card that has the lowest interest rate and then cancel all the other cards and then cut them up and throw them away. You should also make sure that you check your credit report once a year to make sure that there are no errors and if there are make sure you take care of them immediately.



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