For some people, filing for bankruptcy is the best way for them to deal with accumulated debt. However, that doesn’t mean that the road afterwards is without struggle. Many find it difficult to secure a loan because filing for bankruptcy can impact their credit score. The good news for those here in Michigan considering filing is that there are still ways that they can get a mortgage loan even after bankruptcy.
Whether a person files for Chapter 7 or Chapter 13 bankruptcy, it will stay on his or her credit report for several years. The person won’t be able to secure a mortgage loan no matter what for a period of time and could be facing higher interest rates when he or she applies. A mortgage loan after a Chapter 7 bankruptcy has a waiting period of a few years, depending on the type of loan desired, but Chapter 13 may be as short as one year.
No matter what, people wanting a mortgage should work to improve their credit score. However, this doesn’t mean taking on additional debt, and the person may need more money available for a downpayment, depending on their score. Experts say that getting one’s credit report from all three credit agencies is a great place to start so the person has a clear idea of what to do.
Closing old accounts may seem like a good idea, but it is best to leave them alone and not put more debt on them. The person should look at multiple lenders and loan options to determine what the best choice may be, and build up savings in the meantime. Also, it’s helpful to have financial documentation readily available, including bankruptcy discharge papers, pay stubs and tax returns.
Though the thought of getting a mortgage after bankruptcy may seem intimidating, it is possible. Still, someone considering bankruptcy here in Michigan will want to ensure that he or she weighs the available options and considers the future. An attorney who specializes in bankruptcy law can help a person see all aspects of the process.