Filing for bankruptcy may have its perks; some of the biggest ones involve being able to get rid of or reducing your outstanding balance. However, doing so will have a negative impact on your credit scores, which, in turn, can be harmful to your credibility as you try to obtain or purchase other things in the future. This includes applying for another credit card, a car loan, or even a home mortgage.
You most definitely can buy a house even after bankruptcy, but it requires proper money planning and patience. Keep a close check on your credit reports, ensuring it is exactly the way it should be and not the other way around. Your credit could be rebuilt on the basis of using loans on installments and secured cards while clearing your accrued balances and paying on time in full every month.
You must be officially discharged from your bankruptcy case before you can even think of requesting for a mortgage loan. This discharge is a way of an order issued by the bankruptcy court, allowing the debtor complete leverage in paying off debts while preventing your creditors from collecting any amount of money in exchange for the debts that are discharged. In other words, you do not have to make up for any of the debts that have been waived off or discharged by the court, and neither does your creditor have a right to question you about them and get you to pay. The court tends to close the case soon after the discharge is proposed. However, this may not necessarily mean the case is over. The bankruptcy may even show up on your credit report for another 10 years!
Keep track of your credit report
Lenders would like to assess your credibility by keeping a close check of your credit scores. Though the credit report may be labeled with bankruptcy for another 10 years, you do not have to wait that long for a mortgage. Things can easily be sped up if you can improve your credit reports that are mostly available to customers by the end of the year. Always look out for discharged debts as, by law, none of the creditors may be allowed to report back for a debt that is discharged as a balance due. In case you come across such an adjustment on your credit report, contact your credit agency to rectify the error.
The whole point of this is to win back the trust of your lenders and is a way of ensuring that you will pay off your debts in time. You could either opt for installment loans or even begin to revive your credit using secured credit cards. Either way, it is a good option to go to prevent any risks to your credit score in the near future.
It is best that you wait at least two years before applying for a mortgage, even though you may be cleared for attaining a mortgage a lot sooner. Timing is everything and wins you back the trust of your lenders while giving you time to financially adjust as per the circumstances.
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