Mortgage Loans after Bankruptcy

Wait Out Bad Debt via SOL or File Bankruptcy?

Should I file Bankruptcy or Wait out my Statute of Limitations on my debt?


For those folks who were hurt financially from the recession of 2008 and have not filed bankruptcy and started to rebuilt your lives back, you need to pay attention on the judgements that you might have outstanding.  Judgment creditors might be leaving alone right now but keep in mind they can always come back to haunt you until the statute of limitations on the judgment runs out.  Bad credit scores will improve as time passes.

Unpaid Debts and Bill Collectors

Many folks who have endured the tough times  and bad credit and with constant calls from bill collectors may now have peace.  If you had all of your credit accounts go delinquent in 2008, it has been 5 years already.  Depending on which state you live, some state’s statute on credit card debt is 5 to 6 years and you may already have surpassed the time limit.  Statute of limitations on judgements in most states is 10 years but, unfortunately, the judgment creditor can extend it to another 10 years.  In most cases, very few judgment creditors renew the judgment.  If the creditor has reasonable proof that you are back on your feet and are making a lot of money, they may reactivate your collection account and try to pursue in collecting the previouly owed debt.  They can file a lawsuit in circuit court and hope that you do not show up to defend yourself so the judge can issue a Judgment .


With a judgment, the creditor has more avenues to collect your debt.  The judgment creditor can try to go after you aggressively by trying to garnish your wages, filing the judgment as a lien on your home, or garnish your checking or savings accounts.  Many states have laws to protect the debtor on the amount on how much a judgment creditor can garnish.

Judgment Proof

For a debtor to be judgment proof, the debtor must not have too much assets. If the debtor only has a few thousand dollars and makes modest income, the chances of your wages or bank accounts getting garnished are slim to none.  However, if the debtor came into a large chunk of change by winning the lottery and the judgment creditor found out about it, you can bet that the judgment credit will think it is Christmas and aggressively go after you by exercising the judgment in any means possible.

Settling a judgment

Most judgment creditor will leave you alone if you they think you are only getting by and have no major assets like stocks, bonds, and a large bank account.  The only way for you to get rid of a judgment creditor is by having the judgment vacated, by settling with the judgment credit with a lump sum, entering into a payment plan, waiting out the statute of limitations, or filing bankruptcy.  On the mortgage end of it, you can qualify for a mortgage loan with an outstanding, unsatisfied judgment only if you have a payment arrangement with the judgment creditor.  Most mortgage brokers will not take on a mortgage loan borrower with a judgment but I do.  I have a select few mortgage lenders that I can get mortgage loan borrowers approved with an unsatisfied judgment as long as the borrower has a payment agreement with the judgment creditor.  Remember that bad credit improves as time passes.

Please contact me via email or telephone if you have an outstanding judgment or prior bad credit and are interested in a mortgage loan.

Gustan Cho NMLS ID 873293

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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