Finding a place to live after losing your home By Leonard Baron, Zillow If you are in the unfortunate financial position where you are losing your home due to foreclosure or short sale, your credit score is probably going to take a pretty hard hit. In "normal times," this could make it really tough to rent your next place of residence. Luckily, these are not "normal times" and most landlords are understanding of renters' financial distress. In fact, many landlords themselves may have experienced financial distress. Whether you believe it right now or not, better days are within reach. To prepare for those better days take steps now to minimize the damage to your credit, your rental prospects and your future. Also, if you are in a position where bankruptcy seems like the only option, you need to discuss this with an attorney and follow his advice on how to handle everything. Nothing can supplement good legal advice. How do you minimize the credit damage? First up, just because you are defaulting on your mortgage loan, don't default on other bills. You still need to pay your cell phone, cable TV, car loan, etc. while you are in the process of working out your housing issues. Each additional account that you default upon will further hurt your credit score, so keep up the payments if you can. When you go to rent another place to live, showing the landlord that you were responsible on your bills will go a long way towards proving you will pay rent to them. Try to do a short sale before letting your house go into foreclosure, which will do less damage to your credit score. I've seen many people with minimal damage from selling their home through a short sale. A short sale will allow you to relinquish your debt in writing as well as get rid of uncertainty and stress. A good real estate agent or lawyer can also assist you to make sure the bank will be less likely to come after you for any deficiency in the short loan payoff. This depends on the state, the lender, etc., but negotiating a short sale should give you much better chances as opposed to just letting it go to foreclosure. Banks are also very open to short sales these days and working with the bank should bring the best outcome to everyone. Your new landlord will also highly value the fact that you tried to mitigate damages by doing a short sale and taking care of your property during the process. You may also want to go to a reputable non-profit credit counseling organization for assistance. Your local government can hopefully advise you on a good organization to work with. Watch out for scam companies and never pay anyone upfront for work they promise they will do. Tell the potential landlord how you are getting help on working on your finances too! Lastly, don't ever get an eviction on your record. If the bank has foreclosed on your property, work with them for an orderly move out. It might be near impossible to explain to a potential new landlord why an eviction should be overlooked by them. As you can see, the above items really comprise being as responsible and professional as possible in handling your bad situation. Landlords will value this behavior when you explain it to them. Now you are ready to go out and look at properties to rent. To increase the chances that you will be approved for a rental, you need to sell your good qualities. If you have a stable job that is going to be a good help but if your employment situation is not great, hopefully you have some savings to back you up. You may also need some credit enhancement, like a guarantee from a relative. Regardless, you should be 100 percent truthful with a potential landlord from the get-go. Landlords are real people too and value potential tenants who are straightforward and truthful. And the landlord is most likely going to pull a credit report and find out your situation anyways, so if you've lied they'll probably reject you. Fill out the rental application fully in all fields in a clean, easy to read, and truthful manner. Explain your situation and how you only defaulted on your house but not any other responsibilities. Tell them how you handled it maturely and left the house in fair condition. Provide the landlord clear evidence that you will take care of their property as well. Doing these things will give you the best chances that you will be approved for the rental. Renting after losing your house is much easier these days than in the past. Being professional and responsible, in all aspects of what undoubtedly will be a painful and uncomfortable process, should allow you to rent a place to live and hopefully start to rebuild your creditworthiness. Leonard Baron, MBA, CPA, is a San Diego State University lecturer, a Zillow Blogger, the author of several books including "Real Estate Ownership, Investment and Due Diligence 101 - A Smarter Way to Buy Real Estate," and loves kicking the tires of a good piece of dirt! See more at ProfessorBaron.com. The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow. More from Zillow: Your credit report is an most important asset Five things to do if you're facing foreclosure Insider's guide to success with a short sale