Filing for bankruptcy is really an easy decision, especially for those who worry about the impact it may have on their future. Even people who are unfamiliar with the specifics of the process and how it works have probably heard about bankruptcies that cost the borrower everything and left them homeless. Fears about the consequences of filing may keep many borrowers who desperately need relief from getting the help they deserve.
One of the most common myths surrounding bankruptcy is that it makes financing a home impossible, if you do not already own one. It is true that borrowers take on significant restrictions around borrowing in return for debt discharge, but many people find that buying a home is still possible after a few years of building good financial habits.
If you have concerns about the way bankruptcy may impact your financial options both before and after you file, it is wise to look at the law and see how it applies to your circumstances. You may qualify for significant debt relief right now, and the sooner you take action, the better. Keep in mind, however, that the process is complicated, so be sure to use good legal resources to keep your rights and priorities protected.
Buying a home after bankruptcy
After you file for Chapter 7 bankruptcy, you must usually wait to make any large purchase. In simple terms, a lender who sees that you just filed for bankruptcy is unlikely to agree to lend you the substantial sum needed to buy the home. If you have the cash on hand to make the purchase, this may also raise red flags, depending on the specifics of your bankruptcy.
It is also important to understand that the bankruptcy is a significant strike on your credit report, which is a huge factor in whether you receive lending approvals. Chapter 7 can remain on a credit report for up to a decade, for instance.
On the other hand, the sooner that you take action, the sooner the financial consequences are over, and as you improve your financial behavior, your credit report improves. Some individuals who file for Chapter 7 find that they qualify for home loans within three years.
Protect the future with action today
Bankruptcy is not something to take lightly, and it is always important to do your own research. As you work toward a fresh start in your financial life, make it a priority to create a strong legal strategy that keeps your rights secure and helps you achieve your goals safely. With careful planning and professional execution, a bankruptcy may offer you just the relief you need to get back on track, and possibly become a homeowner.