Effect on Your Credit of Foreclosure, Work-Outs, & Bankruptcy
	General Rule. Usually there is no real difference in how a foreclosure, workout, deed in lieu of foreclosure or bankruptcy affects your credit report. What is more important is that you get back on track so that your credit report does not suffer any additional derogatory information. You can generally get the best home loan interest rate within about 2 years after a bankruptcy.

As to whether you can minimize the impact of your financial problems by selecting a workout instead of a foreclosure or bankruptcy, I doubt that any of these end results have more or less effect on your credit report.

Although a bankruptcy stays on your report for 10 years, it usually has little impact after 1 to 2 years, as long as you are back on track. Most people can qualify for a prime (low) fixed interest rate mortgage about 2 years after a bankruptcy filing.

A foreclosure or short sale or deed in lieu of foreclosure impacts your credit very similar to a bankruptcy. You probably cannot get a prime home mortgage for about 2 years.

I think that the most effective way you can lessen the damage to your credit report and get back on track, is to get back on track with your finances as soon as possible. Don’t waste time. Don't struggle along for years.

One of the biggest mistakes that you can make is to continue to go on for months and years with difficulty every month with the payment of your bills. It is common for many people to continue struggling for years. They never get back on track because they don’t get out from under the 24% to 33% interest rate on credit cards and high adjustable rate mortgages.

Since they can never get caught up, they continue on with more credit report dings. And never get back on track.

Whatever you do, get a plan to get back on track as soon as possible.

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