Bankruptcy in Escondido, California, can be a positive thing to get rid of some debt regardless of the negative stigma surrounding it. Many consumers chose Chapter 7, which requires selling non-exempt assets, or Chapter 13, a repayment plan. It helps knowing what to do after the discharge and how to make a recovery.
Managing finances and a job after discharge
Consumers should get a discharge from Chapter 7 bankruptcy within four to six months and from Chapter 13 within three to five years. While consumers commonly don’t lose primary homes in Chapter 7 and Chapter 13 bankruptcy, they must ensure that they maintain current payments. The first thing some lenders consider is how well the borrower has maintained payments, so missed payments reflect negatively.
Bankruptcy doesn’t remove liens, and the lender can seize the home for missed payments regardless of the type of bankruptcy filed. It is also essential to maintain a job to look more responsible to a lender, which increases odds of loan approval. Having a job and debts forgiven enables a consumer to build savings and maintain a budget to avoid a repeat of the situation.
Improving credit after bankruptcy
A common myth claims that consumers will never be able to get credit after bankruptcy, which isn’t true. It is important for consumers to check their credit report for errors; it’s available free from all three major credit bureaus annually.
Secured credit cards from a bank or other lender may help consumers rebuild credit, which requires a deposit equal to the limit. In some cases, consumers can apply for government home loans one year after a Chapter 13 case and two years after a Chapter 7 case. Government lenders may make exceptions to the waiting period if the borrower can prove that an extenuating circumstance, such as job loss, forced foreclosure.
Bankruptcy requires patience and effort to make a full recovery and improve credit scores. Chapter 7 stays on a credit report for seven years and Chapter 13 remains for 10 years. Bankruptcy gives some debt relief, but it should be considered carefully.