Our Escondido readers may be aware of some of the many factors that come into play when a person considers filing for bankruptcy. First of all, there are different types of bankruptcy to consider. But, for many of those individuals who do not have a sufficient income, Chapter 7 is the type of personal bankruptcy they are most likely to consider. In this type of bankruptcy action, known as a "liquidation" bankruptcy, the filer lists all of their non-exempt assets, which are then sold off with the proceeds going toward the balance owed to creditors. Any remaining unpaid balance is then discharged.
For someone considering bankruptcy, Chapter 7 can be a very useful option. Although it is not available to everyone - it depends on income - for those who do qualify, the discharge of debt can lead to a much more solid financial footing. However, most everyone who has considered filing for bankruptcy knows that doing so does have its drawbacks, most notably a black mark on the filer's credit score. And, some people would probably believe that this black mark will keep them from making significant financial transactions, such as buying a car or a home, for years.
In fact, someone who has filed for bankruptcy may be eligible for a mortgage within only a couple of years. Depending on the type of personal bankruptcy option, a filer in a post-bankruptcy financial existence may be able to pursue a government-backed mortgage in as little as 1-2 years, and a conventional mortgage in as little as 2-4 years.
There are many reasons why an Escondido resident may be hesitant about considering personal bankruptcy, and the subsequent lack of mortgage options could be one factor. However, when an individual gets the right information about where they stand financially, this type of factor can become less of a drawback during deliberations concerning whether or not to file for bankruptcy protection.
Source: Business Insider, "Even After Bankruptcy You Are Still Eligible For A Mortgage," Michele Lerner, Oct. 10, 2012