Filing for bankruptcy can be a good option if you want to manage your debt you can no longer pay off. It will offer debt relief and a new financial start. You can stop your creditors from collecting on your debt, taking action against you, or trying to repossess your property. But, bankruptcy remains on your credit report for years. Because of this, it can be hard for you to secure a loan or credit card. You must know the impact of bankruptcy on your ability to get approved for a mortgage someday. A great Las Vegas Bankruptcy lawyer can you the right legal advice on this matter.
When Can You Secure a Mortgage
Securing a mortgage after you filed for bankruptcy can be hard. Much depends on the kind of bankruptcy you chose to file. The effect of the filing on your credit can continue for up to ten years. However, the effect lessens over time. Before you apply for a mortgage, review your credit report first to ensure its accuracy. Dispute any errors with the right credit agency.
If you are looking to get a mortgage after bankruptcy, rebuild your credit first to increase your chances of approval. This means creating a budget, paying your bills on time, and obtaining a secured credit card.
Chapter 7 vs Chapter 13
Purchasing a house after bankruptcy is possible. You must understand the difference between Chapter 7 and Chapter 13 bankruptcies.
When you file for Chapter 7 bankruptcy, you must sell what you own to pay toward your unsecured debts such as personal loans, credit card debt, and medical bills. In general, this type of bankruptcy works for those who have limited incomes and cannot pay their debts back. While this bankruptcy remains to be seen on your credit report for several years, you can still secure a mortgage. Just allow enough years to pass from your filing and ensure you have a significant down payment and have rebuilt your credit score.
Meanwhile, a Chapter 13 filing means you will need to complete a repayment plan without selling your property. It allows you to pay your creditors a part of the debt over a period of 3-5 years. A bankruptcy judge may discharge the remaining unsecured debts after you complete the payment plan. This bankruptcy filing will be visible on your credit report for up to 7 years. But, you can take this time to learn more about the various kinds of loans. Mortgage loan providers vary in their requirements.