Many people hesitate to even consider filing for bankruptcy because they fear a bankruptcy on their credit report will destroy their future credit and financing prospects. Specifically, many people believe that it will be impossible to be approved for a mortgage to purchase a home if they have a bankruptcy in their past.
However, you should know that many people have purchased homes after bankruptcy and some even have a better chance of doing so because of their bankruptcy case. If you have questions about your future home-buying prospects, be sure to discuss them with a bankruptcy attorney who can advise you regarding your specific situation.
Poor Credit Ratings Prior to Bankruptcy
While it is true that bankruptcy is a negative mark on your credit that can last for up to seven years, a bankruptcy may actually improve your overall credit record. Many people who are considering bankruptcy have numerous negative marks on their credit, which can include:
- Accounts with delinquencies
- Accounts in default or collection
- Medical or utility bills in collection
- Legal judgments
Bankruptcy can often eliminate the balances on all of the above accounts, which can significantly reduce or eliminate the number of open derogatory accounts that you have. Having one single bankruptcy instead of many different adverse accounts can put you on your way to better credit.
Rebuilding Your Credit After Bankruptcy
Increasing your credit score after bankruptcy is definitely possible, however, it will take patience and discipline. If you pay your bills on time and avoid amassing new credit balances, your score will increase over time. A bankruptcy can free up funds to allow you stay on top of your bills to improve your credit score.
If you keep a positive financial record after your bankruptcy, you may be eligible for a mortgage loan from the Federal Housing Administration (FHA) after only two years from your discharge. You may not even have to wait that long if you can prove to the FHA that your bankruptcy was caused by temporary circumstances beyond your control, such as a medical event or reduction in income.
Call 610-255-7500 today for a free consultation.
At the Law Office of Michael Alan Siddons, we can review your situation and advise you regarding your options after bankruptcy. You can trust we want the best for our clients and their financial futures, so if you are considering bankruptcy in New Jersey, Pennsylvania, or Maryland, please call our office to learn more about our services today.