Buying a house after bankruptcy can be a daunting task for many people who have undergone the trauma of losing almost everything. Close to 500,000 personal bankruptcies were filed this year which accounted for a significant rise in overall filings from the previous year. For individuals who must file for either chapter 7 or chapter 13, receiving mortgage refinancing with bankruptcy on their financial records can also be a difficult approval to attain without an adequate financial strategy. Whether purchasing a home or refinancing existing property, there is hope after experiencing the dreaded "B" word for most families.
There are two types of filings that have differing effects on the personal finances of an individual including mortgage refinancing with bankruptcy or any other concern. It is necessary to adequately analyze which is the best choice for anyone's situation. Many times an individual is forced to file because of unforeseen financial circumstances due to illness, divorce, job loss or other serious events in a family. Necessary filings are not always due to poor money management, although the trend in the American culture lends toward unruly spending through credit card debt and personal loans. This has caused a rise in bankruptcies that account for filings that would not necessarily have occurred with good money management.
However, there are many households that sustain the effects of bankruptcies while having done all that could be done to avoid it. Sometimes when a family loses almost everything it may seem that their financial future and security is permanently at risk which also makes buying a house after bankruptcy seem impossible. It is not, however, too late nor impossible to maintain, repair and get ahead financially if the proper advice and actions are put into place. The basic purpose of filings is to provide a fresh start for the indebted and to hopefully repay some debts with liquidated assets. There are two types of strategies available to consumers who are considering this option.
Each can be filed in court for generally under $200 barring any attorney's fees. Of course, it is usually wise to receive attorney advice for these types of transactions which add additional costs. Chapter 7 filings entail the common liquidation of assets and complete financial disclosure with strict adherence to laws and requirements and can restrict anyone from buying a house after bankruptcy for an extended period of time because of poor credit. Chapter 13 filings are used generally for a re-organization of the financial structure of an individual's assets, financial obligations and budget. It also provides protection for the debtor in cases of complete financial loss of assets. For example, a foreclosure can be stopped, creditors held at bay and interest on back taxes put on hold.
An automatic stop is held on creditors from claiming or forcing liquidation of assets, garnishing wages and a multitude of other financially disrupting actions. Many people use chapter 13 to provide extra time in which to make mortgage payments that they may be behind in or to give extended time in which to sell a home and pay off a mortgage. Mortgage refinancing with bankruptcy filed for chapter 13 is a bit easier than with chapter 7 filings. One feature that is very restrictive in receiving chapter 13 bankruptcies is the imposed budgeting requirements for all who file. In order to meet financial requirements for a chapter 13 filing, consumers must agree to mandatory budget management which will be legally overseen.
Even though this can be restrictive, it does provide a more sensible way of getting out of debt and eventually repairing poor credit in order to more quickly buy a house after bankruptcy. In choosing either scenario of bankruptcy options, there are of course repercussions to the financial status of any consumer. Many suffer from poor credit from 7-10 years and pay higher interest rates on many types of payments throughout that time. It is getting to be easier, however, to receiving mortgage refinancing with bankruptcy which is generally one of the main concerns for anyone going through a financial setback.
Most lenders prefer anyone who has experienced bankruptcy to wait approximately 2 years before buying a house after bankruptcy or before refinancing after bankruptcy. This provides creditors with an established financial payment pattern for the previous 2 years. Lenders are most concerned with current earnings and timely payments over the 2 years prior to receiving financing options for a home. It is becoming relatively easy to receive approval for loans after filing for bankruptcy since there are so many Americans who have sustained this difficult financial set back at least one time in their lives.
For those who are considering buying a house after bankruptcy or mortgage refinancing with bankruptcy, there is always hope in getting back on the right financial track. "Discretion shall preserver thee, understanding shall keep thee:...That thou mayest walk in the way of good men, and keep the paths of the righteous...For the upright shall dwell in the land..." (Proverbs 2:11,20-21) No matter what kind of circumstances any consumer finds himself, it just takes wisdom, good counsel and execution of a workable financial plan to climb out of any financial hole.
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