Making Homeownership a Reality After Bankruptcy
When weighing the pros and cons of bankruptcy proceedings, most homeowners are warned that their credit will be tarnished for at least seven years. Fortunately, many who were forced to choose bankruptcy or foreclosure are finding that their credit is rebounding faster than this. In fact, they may be able to purchase a home in significantly less time than originally thought.
One couple was able to purchase a home outside of Phoenix two years after filing for bankruptcy when they qualified for a loan backed by the U.S. government. Such success stories are becoming more common, highlighting how life after bankruptcy can involve a bright financial future.
Potential Reasons for Quick Turnaround
Unfortunately, the Great Recession forced many people into similar financial predicaments. As a result, many people with foreclosure or bankruptcy proceedings in their past are not bashful about discussing future financing options. There’s nothing to be ashamed of, when many of their peers are also in similar situations.
Because they often find themselves in plentiful company, these individuals are more likely to look for mortgages and discuss options with banks instead of avoiding these discussions out of a misplaced sense of shame. This is good news, because many who are brave enough to have these conversations are finding support.
Mortgage experts note that those who are receiving these loans have worked hard to build up their credit after filing for bankruptcy or going through foreclosure. This typically involves successfully paying bills on time and not increasing their debt. Taking such steps suggests that although these previous homeowners faced a difficult time in the past, they are a good bet in the future.
In addition to avoiding further debt and paying existing bills, other measures can help an individual obtain a mortgage after a foreclosure or bankruptcy proceeding. These include:
- Find and hold a steady job
- Establish savings account, ideally six months worth of living expenses
- Properly use a credit card: use it lightly, regularly and pay it off fully every month
Finding yourself with compromised credit can be frustrating. If you or a loved one is struggling to manage debt or attempting to determine options available after filing for bankruptcy or going through foreclosure, it is wise to seek the counsel of an experienced bankruptcy attorney. Your goal should be to determine the best path towards future financial stability.