Bankruptcy and your credit report:
You may not be able to see why now because you're drowning in various debts, but there will likely still be circumstances in which you'll require or want credit in the future. Whether it's purchasing a car, leasing, buying a new home, or even just renting; all of these situations require viable credit, and there's not much that looks worse on your credit report than a bankruptcy.

Whenever a financer is deciding on if they should offer credit to somebody, they will typically check the ability of the person to make routine payments based on three things; the current debt to income ratio, how stable their finances are, and payment history. With a bankruptcy marked on your report, your stability and financial history aren't going to look great to anyone.

Your credit report(s) can (and more often than not will) store information on your filing bankruptcy for as many as ten years after discharge. While it's definitely possible to earn credit after a Chapter 7 or Chapter 13, assuming your credit report is what your credit worthiness is founded off, it can be particularly hard if not unachievable in many situations. If and when you do begin to re-establish your credit, you will end up paying "high risk" interest on anything and everything from mortgages to car loans.

While it's certainly not impossible to obtain a mortgage after filing for bankruptcy, if you're considering buying a home a bankruptcy will make it much more difficult. Private mortgage firms will place the borrower under considerable scrutiny - unless the bankruptcy is ancient history and credit has been great since. Then still, it can be hard to get rates as competitive as somebody with an equal credit score but a cleaner financial past.

FHA mortgages generally require the applicant has established at a minimum 2 other credit accounts from the time of filing for bankruptcy, which have got to be kept in perfect standing. The person borrowing is also required to wait a time period of at a minimum two years after filing and discharge for Chapter 7's or at least one year following Chapter 13's.

VA mortgage loans usually require a two year span of stable credit following filing and discharge also, though extenuating circumstances can be taken into account.

Are you considering bankruptcy? Have you exhausted all your other options? In most circumstances we can help you find debt management companies that offer viable alternatives, no home-ownership or security required. Click here.