On behalf of Law Offices of Mark M. Kratter, LLC on September 28, 2012
Connecticut residents may avoid filing for personal bankruptcy because they believe it will prevent them from purchasing a home for many years. Although a bankruptcy will stay on an individual's credit record for at least seven years, filers can actually begin to apply for mortgages as soon as a year after filing for bankruptcy, as long as they have shown that they are working to improve their credit and overall financial status. With this news, more people may realize that filing for bankruptcy may be the way to go when struggling with excessive levels of debt.
People who file for Chapter 13 bankruptcy can apply for a mortgage that is guaranteed by the Federal Housing Administration (FHA) one year after filing. Those who choose to file for Chapter 7 can apply two years after they file. However, conventional mortgages require a wait from anywhere between two and four years.
One of the most important things to remember is that consumers who wish to apply for a mortgage soon after filing for bankruptcy must show that they are diligently working to improve their credit and reestablish financial responsibility. Consumers can begin to do this by paying all of their bills in a timely manner, or even by having a secured credit card that is paid on time, every time. Lenders also may ease their rules if the reason the consumer chose to file for bankruptcy was due to a spouse's death, illness or even a divorce. They will likely want to see a letter that explains the hardship they borrower went through, as well as documentation proving the hardship claim.
Filing for bankruptcy can be a beneficial way for Connecticut residents to get their debt under control, but it will also take work to reestablish a good credit record. People who are diligent in showing financial responsibility may be able to obtain a mortgage sooner, and can quickly start over after a bankruptcy. Based upon the type of bankruptcy and one's financial record, a mortgage can be obtained in as little as year, which can be a surprise for many people who have put off filing for bankruptcy due to misconceptions about the availability of credit in the near future.
Source: The New York Times, "Life After Bankruptcy," Vickie Elmer, Sept. 13, 2012
