Foreclosure and pre-foreclosure are two of the three stages of the foreclosure process. During foreclosure, a house is auctioned off, usually by the lender, to the highest bidder. The period from when the default notice is issued to right before it is auctioned off is the pre-foreclosure stage.
There are many consequences of foreclosure. It can affect several things, such as the amount of debt you owe and your credit score. Actually, your credit score can go down by hundreds of points in the event of a foreclosure. This can make future borrowing a problem for you. It is best to try to make your mortgage payments on time and actually buy a house or apartment that you can afford.
Usually, a person or company files for bankruptcy when they can no longer afford to pay off their credit line. There are least seven different kinds of bankruptcies. The most common types are Chapter 13 and Chapter 7 bankruptcies; they are for individuals. Chapter 11 and Chapter 14 bankruptcies are most common among companies or organizations.
Houses that are in a pre-foreclosure state can be rented out to tenants and tenants can still continue living them. However, it is not always ethical to rent out units of a house that is in a pre-foreclosure state if you do not let the potential tenant know what they are getting into. People can rent out properties for extra money as well. If you are a tenant in a house that is in a pre-foreclosure state, you can still stay in it as long as you are not related to the borrower and signed a lease before the foreclosure went into effect.