How To Qualify For Bankruptcy

Mar 7th, 2014 | By | Category: Debt

Declaring bankruptcy can often be the best option when you find yourself drowning in debt. Bankruptcy is supposed to assist individuals who cannot find another way out. A Chapter 13 Bankruptcy enables you to use future disposable income in order to pay off a specific percentage of your debts over a set period of time. A Chapter 7 Bankruptcy lets you use current assets, if any, to pay off a share of your debts immediately. After the bankruptcy is administered, you’re free from your obligation to repay most debts. Additionally, if you declare bankruptcy, you free yourself from creditor and collection agency phone calls and have a chance to start all over again with a fresh slate.

A common concern asked by clients is ‘how long until I can get a mortgage? ‘ When you declare bankruptcy, it will be published in your credit history that you filed for bankruptcy. A bankruptcy appearing on your credit report tells potential lenders that your prior lenders probably didn’t get back all the money which you borrowed. If future lenders see that you’ve declared bankruptcy previously, you could be seen as high-risk candidate, because you may not have changed, but not always. Creditors know that you can not receive another discharge for a good length of time after receiving a Chapter 7 discharge. This fact causes many companies to market to people who just received a Chapter 7 discharge as these companies feel that a recent Chapter 7 discharge makes someone a safer credit risk. Obtaining a mortgage after bankruptcy may be difficult. However, there are ways to go about doing it.

But there are some important issues to consider. If your lender has so far not foreclosed yet, and you choose to file bankruptcy, you could possibly still lose your home. The lender is permitted to apply for relief. This means the bankruptcy court can allow a sale of your home to pay your mortgage debt. This type of sale is most likely in a Chapter 7 bankruptcy, in which your debt is discharged, while if you file Chapter 13 bankruptcy you can establish a payment plan and possibly keep your home. Use of a Chapter 13 could thus help you avoid foreclosure.

It’s possible you will be eligible for certain government programs to help you have a mortgage. Some will work with you to put less money down on your new home and persuade a lender that you should qualify, even when you’ve declared bankruptcy in the past. If you have a solid income now and are working to pay back debts, it’s possible you will qualify for a number of these programs.

Filing for bankruptcy is a difficult decision that can have a significant impact on your financial future. You need to make absolutely sure it’s the best option for you. Bankruptcy ought to be your last resort financially, since it can make it difficult to do things like get a mortgage in the future.


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