Financially, you may be struggling, but if you’re working toward buying a home in the future, you may feel like seeking a bankruptcy is the wrong path for you. Even though your debts are at their peak and you’re having a hard time paying them back, you may feel that a bankruptcy will tarnish your record much longer than if you try to negotiate with each of your creditors or find a way to pay back what you owe.
The reality is that allowing your finances to stay in poor shape for too long is going to hurt you much more than filing for bankruptcy. You may end up facing judgments and having to deal with court dates over your missed payments. Your credit score will fall to abysmal levels, and you’ll have those penalties on your credit record for many years to come.
If you’re interested in buying a home and are avoiding bankruptcy because of it, stop. A bankruptcy won’t prevent you from buying a home in the future, and it won’t stop you from being able to get a mortgage. While it may slow down your plans, the point of a bankruptcy is to get you back into a secure financial position, so that you can have the life that you deserve.
How soon can you get a mortgage after you file for bankruptcy?
Mortgage lenders do want to lend to responsible individuals. For that reason, you may find that most won’t approve you for the loan you want right after you go through bankruptcy. Some make you wait five years. Others allow you to borrow after just a few.
While you’re in the waiting period, one of the best things you can do for yourself is to take the time to build up your credit. Keep your credit record clean, and show that you’ve turned your finances around. Then, if you do seek out a loan at the three or four-year mark, the lender will see what a difference that bankruptcy made for you and how your financial situation has changed since then.
Re-establishing good credit is the key to obtaining a mortgage in the future. Bankruptcy may help you do that.
