One of the most common fears that keeps people with overwhelming debt from filing for bankruptcy is worrying that they may never recover financially. It is plain to see why so many people share this fear, but bankruptcy is intended to give debtors the tools they need to rebuild a firm financial foundation, not keep them from recovering.
Often, this fear stems from misunderstandings about the bankruptcy process itself and how long lenders penalize people who use bankruptcy. These penalties and restrictions on borrowing are the trade-off for discharging unsustainable debt. In the eyes of the law, borrowers who use bankruptcy may take the opportunity to wipe their financial slate clean, in exchange for agreeing to live with some borrowing restrictions for a period of time.
Can I buy a home after a bankruptcy?
In some instances, borrowers who file for bankruptcy face difficulty qualifying for loans to buy a home. It is true that this is one of the setbacks that you may face after bankruptcy, but it is probably not as restrictive as you might think.
Once bankruptcy finalizes, a borrower may need to wait for a few years to qualify for a loan to purchase a home, but, depending on the value of a home you wish to buy, you may qualify again sooner than you expect. This is one of the key points that you must navigate carefully during a bankruptcy, to get you back in good financial standing as quickly as possible. Borrowers who use the guidance of a bankruptcy attorney have strong chances of navigating these issues successfully.
Will my credit recover?
There is a great deal of conflicting information on how long a bankruptcy affects your credit. First, the bad news: a Chapter 7 bankruptcy may remain on your credit report for up to 10 years. However, that does not mean that you cannot borrow more money for 10 year.
In many cases, you may be able to borrow again in as little as one year. While borrowing so soon after a bankruptcy means higher interest rates for the borrower, it is still typically possible to find lenders to work with you.
The sooner that you begin moving forward with your bankruptcy, the better. You deserve a clean slate for rebuilding your financial world, with a strong legal strategy to help you along the way. With careful planning and patience, you can keep your rights secure while you work to recover after hard times.