While bankruptcy is not something Nashville residents should take lightly, neither is it to be feared. There are many valid reasons to file for Chapter 7 or Chapter 13 bankruptcy, but being unable to obtain a home in the future should not scare you away. It will take hard work and sacrifice, but buying a home following bankruptcy is not impossible.
Realtor.com explains that yes, your credit score will fall well below the point where a bank will lend you money once you declare bankruptcy. Many credit-card companies will also decline to lend you money, but you can prevail with patience, persistence, and fulfillment of some simple steps, which follow.
You will have to wait until your bankruptcy is discharged to start. Then, obtain a secured credit card. It works like a debit card and allows you only as much money as you have deposited. Getting one from your bank should not be difficult, and you can use it for everyday purchases. It may take several months for you to obtain an installment loan, but don’t give up. Car dealers and some credit-card companies may give you a high-interest loan. Here are some additional tips for rebuilding your credit:
- Obtain copies of your credit report from the three main reporting agencies and work to clear them of any outstanding debts.
- Do not rush into credit-card debt. Keep your purchases small and do not seek too many credit cards.
- Make payments on time or earlier. Pay a little extra each month to pay down the principal quickly.
- Remain at your job if possible to show stability.
- Save money and make regular deposits to a savings account.
You may qualify for a home loan within a few years, but it is likely to be at a higher interest rate. While a car payment is one thing, a 30-year mortgage with a high-interest rate can quickly become a burden. Wait a few years as you work to re-establish your credit before seeking a mortgage loan.
When you are ready to apply for a home loan, all of these tips can help you show that you have a steady job, money in the bank and can be relied upon to make on-time payments. Retirement plans, such as a 401(k) will add to your appeal as a loan candidate.
The information in this article is general in nature. It should not replace legal counsel.