Every year, hundreds of thousands of Americans file bankruptcy. Although they understand that bankruptcy can have long-lasting financial implications, it’s sometimes the only reasonable way to get out of debt. Despite these implications, it’s still possible for residents of California to buy homes after bankruptcy.
Understanding the basics of Chapter 7 bankruptcies
Although you have multiple bankruptcy options available, Chapter 7 bankruptcy is usually the most ideal option. This form of bankruptcy involves selling your assets to satisfy existing debts. Even if your assets can’t fully repay your debts, the court will discharge most of the debts you owe.
After the court processes your petition, your Chapter 7 bankruptcy follows you for a full decade. However, this doesn’t mean you need to wait 10 years before you can receive a mortgage. Although you’ll have better chances after the bankruptcy falls off of your credit history, you can still apply and be approved for a mortgage.
Every post-bankruptcy recovery process is different. Your results will depend on a variety of factors, including how hard you work to improve your credit in the years following bankruptcy. Regardless of your situation, the following tips usually help bankruptcy filers improve their chances of getting mortgages.
Take advantage of different lending programs
Most Americans get mortgages from conventional lenders. Even if you’re not big on the idea of government subsidy, you should explore USDA and VA loans. You’ll need to wait for two and three years, respectively, before your post-bankruptcy eligibility reappears for VA and USDA loans. If you’re rural based, you may qualify for a USDA loan. Only veterans and military members can receive VA loans.
Get into safe borrowing habits
Believe it or not, you can safely use credit cards after filing for bankruptcy. Your best option is to get a secured credit card. Secured credit cards require you to place money down before getting an open line of credit. Since you’ll have a greater incentive to make good on your obligations with secured credit cards, they’re generally safe to take out. Always pay your bills when they’re due to avoid bad credit marks.
If you’re still struggling with life after bankruptcy, there are things that you can do to help your situation now. A bankruptcy attorney can help you rebuild your future.