Bankruptcy must be avoided as it tarnishes your credit score and hence damaging your credit report along the way. As harmless as it may seem, bankruptcy has negative implications on one’s ability to acquire credit in the future. You can face trouble obtaining credit cards, loan for your car and mortgage for your home.
However, there is good news for those who are struggling with bad credit and bankruptcy to buy a house following bankruptcy. The follow steps will help you understand how:
Firstly, to be considered for a mortgage loan request, bankruptcy must be removed, the process is known as bankruptcy discharged. A bankruptcy discharge is an order from a bankruptcy court that simply achieves two important things:
• It releases the debtor from any liability on some debts
• It restricts creditors from collecting on your discharged debts
So in actuality, you don’t have to pay any discharged debts, and your creditors can’t force you to pay either. Discharge bankruptcy is the initial process one can take and, while it doesn’t really conclude the closing of your case, it is a noteworthy step lender must take.
Secondly, you must look at your credit report. Your credit report shows you your financial viability and how much you are worth. Note that bankruptcy can remain on your credit report for 10 years. However, this does not mean that you have to wait for 10 years to get another mortgage.
By having a copy of your credit report, you can be better informed about your credit score. It’s advisable to have your credit report taken out quarterly so that you are always updated about your financial viability.
The bottom line being that it is possible to buy a house after a bankruptcy. However, it will require your patience and proper financial planning. By evaluating your credit report and making sure it is correctly appraised and in good shape, you are off to a good start. Make your credit payments in the time it is due and don’t spend irrationally. Don’t forget that after obtaining mortgage, you will be requiring insurance for your house as well. This is why you must have a clear well defined financial plan.
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