Dear WGG,

I’m sorry for your difficult predicament and wish you the best of luck. Unfortunately, a foreclosure is seen as very negative.

A foreclosure is essentially repossession of your house because you were unable to make the mortgage payments. A mortgage is seen as very positive by lenders because it is an indicator of financial stability. When a house is foreclosed on, it signals substantial financial instability and high lending risk.

If the foreclosure is inevitable, it is even more important to keep all of your other accounts paid as agreed. The positive accounts will offset the negative effect of the foreclosure over time.

Some companies provide financial and job search counseling for employees who are about to be laid off. If yours does, take advantage of it. A financial counselor may be able to help you keep control of your finances until you are able to find new jobs.

If your company is not providing assistance, seek out a non-profit credit counselor that can help you establish a budget and financial management plan and who can work with your creditors to help you get through the layoff and job search.

A good counselor will not just offer a debt management or debt consolidation plan. They also will provide budgeting and personal finance training so that you can be prepared for this situation if it should happen again in the future.

Ideally, you should maintain enough savings to cover six months of expenses. That sounds like a lot, but is achievable with planning and commitment.

As soon as you get back on your feet -- and I’m confident you will -- begin to set aside as much as you can in a savings account. At first, it might be just a few dollars a month. That amount will build, though. Consider it off limits except in extreme emergencies. Eventually, it will grow to a substantial savings that can get you through any future hard times.

Thanks for asking.