Bankruptcy and Foreclosure

Life After Bankruptcy and Foreclosure

Rebuilding credit after bankruptcy and foreclosure

If you have filed a bankruptcy and/or had a foreclosure, the chances are that your credit scores have suffered.  A bankruptcy or foreclosure can plummet someone’s credit score more than 150 points or more.  The good news with filing bankruptcy is that you now have a fresh financial start in life and can start rebuilding your credit.  Same as with a  foreclosure.  As long as your mortgage lender is not suing you for a deficiency on your negative balance of your mortgage, you can have a fresh start in rebuilding your credit and can qualify to buy another home in a few years.

As bankruptcy and foreclosure ages, credit scores will improve

A person’s credit score will automatically improve as time passes after filing bankruptcy even if you do not establish new credit.  If your credit scores went from 700 to 475 after filing bankruptcy, your credit score will steadily increase to over 500 in several months after filing bankruptcy even if you did not establish new credit.  Make sure that you are not with any monthly payments after filing bankruptcy because late payments after a bankruptcy discharge will be frowned upon by mortgage lenders if you ever decide to buy a new home in the near future.

 Home Loan after Bankruptcy and Foreclosure

If you are intending on buying a new home and getting a new home mortgage loan after a bankrutpcy discharge, you need to realize that there is a 2 year minimum waiting period for you to qualify for a mortgage loan.  There are two types of mortgage home loans.  Conventional loans and FHA insured mortgage loans.  The mortgage loan program you will qualify for after filing bankruptcy in two years is a FHA mortgage loan.  Conventional loans have much higher waiting period qualifying criteria after a bankruptcy and foreclosure depending on the mortgage lender.  Some conventional lenders have 4 year minimum waiting periods while others have 7 year waiting periods.

The bottom line is that there is hope and life after filing bankruptcy and a foreclosure.

Related> Paying down your credit cards can boost your credit scores

Related> Paying down credit cards prior to applying for home loan


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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