I Heard That...I Won't Get Credit for 10 Years
For most people this is simply wrong. In virtually every year for the last decade, more than a million people filed bankruptcy. That' s simply too many people -- most of whom have regular income and are back on their feet -- for creditors to ignore. Your credit report can reflect a bankruptcy for 10 years but most people qualify for some loans immediately after their bankruptcy is completed.
Many lenders will charge higher interest rates so you will need to shop around for reasonable deals. However, historically the waiting period after completing a bankruptcy to qualify for conventional home loans is about two years. In other words, many lenders will effectively ignore a bankruptcy if you otherwise qualify and have handled your remaining debts responsibly for two years after bankruptcy.
Indeed, many lenders will now suggest bankruptcy to get rid of old debts in order to qualify for a new loan. By eliminating your old debts, your debt-to-income ratio will improve and it will be difficult to file again for certain time periods. So they can count on your income being used to pay them -- and that you may not be able to file a bankruptcy again for awhile.
So in reality, the greatest danger is actually getting too much new debt and wasting the fresh start given in a bankruptcy. Being careful about credit is simply more critical.
Many lenders will charge higher interest rates so you will need to shop around for reasonable deals. However, historically the waiting period after completing a bankruptcy to qualify for conventional home loans is about two years. In other words, many lenders will effectively ignore a bankruptcy if you otherwise qualify and have handled your remaining debts responsibly for two years after bankruptcy.
Indeed, many lenders will now suggest bankruptcy to get rid of old debts in order to qualify for a new loan. By eliminating your old debts, your debt-to-income ratio will improve and it will be difficult to file again for certain time periods. So they can count on your income being used to pay them -- and that you may not be able to file a bankruptcy again for awhile.
So in reality, the greatest danger is actually getting too much new debt and wasting the fresh start given in a bankruptcy. Being careful about credit is simply more critical.
8/07
