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Generally, if you go through a foreclosure, your credit score will drop 100 points or more, though the actual drop in credit score can vary from one borrower to the next. The past due entries for missing your payments will also drop your score. (The hit is more severe if you had a very high credit score before the foreclosure action. However, if you already have a low credit score, there is less of an impact.)
Following a timeshare foreclosure, you could face a deficiency judgment. When a lender forecloses on a mortgage, the total debt owed by the borrowers to the lender can exceed the foreclosure sale price. The difference between the sale price and the total debt is called a deficiency.
Example. Say the total debt owed for a timeshare is $15,000, but it only sells for $10,000 at the foreclosure sale. The deficiency is $5,000.
Whether or not you face a deficiency judgment after a timeshare foreclosure depends on state law. In Connecticut, if you go through foreclosure and the sale price is not enough to cover the balance of your mortgage, your lender can come after you for the "deficiency." In Florida, for instance, the borrower is not subject to a deficiency judgment after a timeshare foreclosure even if the proceeds from the sale of the timeshare are insufficient to cover the debt (Fla. Stat. Ann. §721.81(7)). Florida law would likely apply here. If the lender decides to write off the deficiency balance instead and sends you a 1099-C Cancellation of Debt form to the IRS, you must include this amount into your taxable income for the next year.
It is now common for employers to run a credit report on potential employees. Since a foreclosure will appear on your credit report, you may have a hard time getting a job if you have bad credit. This, of course, depends on the employer and, to some extent, the reason for the foreclosure.
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