One of the most common concerns people have about filing for bankruptcy is whether they will ever be able to qualify for a mortgage. It’s true that it’s not common for bankruptcy petitioners to obtain a mortgage right after their debts are discharged. However, you may be able to purchase a home sooner than you think. Your bankruptcy lawyer can assess your particular situation and provide personalized guidance.
Obtain Your Credit Report
Chapter 7 bankruptcy stays on your credit report for 10 years, which is longer than Chapter 13 bankruptcy. However, you can begin rebuilding your credit immediately. Your first step is to obtain all three of your credit reports; you’re entitled to one free copy of each every 12 months. Check your reports carefully for any errors that could drag your credit score down further. Bear in mind that if you’ve just recently finalized your bankruptcy, your old debts may still be on your reports.
Use Credit Carefully
To establish credit after bankruptcy, you’ll likely need to take out a secured credit card. Use it wisely. Never use all of your credit at once and pay off the entire balance each month. Your other option may be to take out an installment loan, such as a car loan. Whichever option you choose, you should always pay your bill on time or a little early. You can set up automatic payments with your bank if you have trouble remembering your bills.
Evaluate Your Budget
Now that your dischargeable debts are eliminated, it’s time to take another look at your budget. Total your monthly income and expenses, and determine whether you can cut your expenses a little further to increase your savings. You’ll need to begin saving for a down payment to obtain a mortgage. Before you’re ready to purchase a home, you should have enough monthly income to cover the expenses associated with being a homeowner, such as property taxes, homeowner’s insurance, utilities, and unexpected repairs.
Here at Cutler & Associates, Ltd., our bankruptcy attorneys can help you save your home from foreclosure. If you’ve already lost your home, filing for bankruptcy now can give you a new financial start to work toward getting another mortgage.