While many homeowners are finding that a short sale is a good way to avoid foreclosure, they are forgetting about the process after the transaction is closed. Yes, a short sale negatively affects your credit, but there are some great ways to help rebuild your credit right away.

First, when planning during the short sale process, make note of what bills are being paid or unpaid. Is it only your mortgage that you are behind on, or is it multiple bills? If you are just behind on your mortgage, you should make every effort to pay the other items on time while you go through the process; this will limit the amount of damage to your credit up front. If you are behind on everything (sometimes this can't be avoided), then you need to consider what steps to take including, bankruptcy, debt settlement, etc. For the purposes of this article, we will address those homeowners who are current with everything but their mortgage, and then address those with a few different delinquencies.

First, start the short sale process as soon as you think you will be falling behind on your mortgage. We have seen evidence that the less delinquent you are when the short sale is completed, the less of an impact it has on your credit score.

Second, when the sale is completed, continue paying every other creditor on time! This seems like common sense, however some people forget that this is important. Keeping other lines of credit current goes a long way in rebuilding your score.

Third, if you have no other lines of credit, attempt to get a secured credit card to start creating new positive forms of credit. This will help offset the derogatory information on your report from the short sale.

Fourth, consider contacting a credit repair agency to assist you. While many don't seem to help much, there are some good credit repair companies out there that work for a reasonable fee. Many times a creditor will make a mistake when reporting negative information regarding your short sale to the credit bureaus. If that happens, even though you did a short sale, they will have to remove the information! Not everyone gets that lucky, though.

Fifth, give it time. Rebuilding credit is not an overnight process, so remember to follow the steps above and give it time for your score to come back. We have had people qualify for another mortgage withing two years after completing a short sale on their old home.

Now we will discuss what to do if you are behind with several creditors.

First, make your list of which creditors you are behind on and the amounts that you owe. If you have a source of income i.e. you are currently working, call each creditor and ask if some sort of a repayment plan is available. If you can't afford anything right now, skip to step three

Second, continue to make the payments once an arrangement is made. If you don't, you will have wasted your time in even calling them to negotiate a plan

Third, if the mountain of debt is too much, then it would be very wise to speak with a lawyer regarding the possibility of bankruptcy. There is no sense in throwing good money after bad if you are paying everything towards your debts and they aren't even going down. A good lawyer will be able to help guide you about options and whether or not you qualify for a bankruptcy plan.

No matter which route you have to take, remember that the worst thing you can do is nothing. There is always a road ahead, and it will be much better if you follow the steps above. A little planning goes a long way in rebuilding your future!