Mortgage Bankruptcy, CA Bankruptcy law: Life after Bankruptcy
A bankruptcy filing delivers a devastating blow to your credit and FICO score, but it doesn’t mean you have to wait 10 years before you can qualify for a mortgage. Many consumers who have filed for bankruptcy have been able to obtain a mortgage, although it is often at a higher rate than someone qualifying for a prime or “A-paper” loan. Chapter 7 Bankruptcy is sometimes searched as bankruptcy 7 and is a full liquidation of all debts by a judge under CA bankruptcy law. This same CA bankruptcy law governs a partial repayment plan known as Chapter 13 bankruptcy, sometimes identified incorrectly as mortgage bankruptcy. Chapter 13 Bankruptcy usually involves judge modification of your mortgage, bankruptcy on all of the rest of your debts or some type of renegotiation.
While credit card companies may care about what happened before you filed for Chapter 13 bankruptcy or Chapter 7 bankruptcy, many mortgage lenders are more interested in your recovery — what you’ve done since your filing. It won’t happen over night, but here are some tips and things to keep in mind when you inquire about a mortgage with a tarnished credit past:
Give explanations. No mortgage lender is going to ignore the fact that you’ve filed bankruptcy (due to CA Bankruptcy law which is not favorable towards creditors) and will likely want to know the cause of the filing. Your lender will be particularly interested in whether the same situation could happen again. Your chances of being qualified are much better if your bankruptcy was caused by a single event such as a loss of employment or a death in the family, than if it was the result of “just spending too much.” Such a catastrophic life event can be a compensating factor in getting a mortgage, bankruptcy 7 years is considered since your filing
If the bankruptcy resulted from a single event, it is important to show your lender paperwork describing the incident, such as the layoff notice or death certificate. You may also want to bring in court documents to indicate when the bankruptcy was filed. CA bankruptcy law requires that the judge issue you discharge paperwork, which you will need to provide.
Demonstrate good money habits now. Many people who file bankruptcy swear off credit altogether, however, it is important to re-establish your credit rating. Get a secured credit card or take on some sort of loan — furniture, a car or a major appliance — to demonstrate that you are able to make timely payments. Make sure you are making other payments (utility bills, cell phone, etc.) on time as well. You won’t turn things around in a year but your credit score will improve over time. This concept is called “re-establishing credit” and is vital in obtaining a mortgage, bankruptcy doesn’t need to be a show stopper.
Dispute any credit report errors.There’s no need to add to your troubled credit history with errors on your credit report. Get a copy of your credit report from each of the three major credit reporting agencies: Equifax, http://www.equifax.com; Experian, http://www.experian.com; and TransUnion, http://www.tuc.com. If you encounter any errors, inform the CRA in writing what information you believe to be inaccurate and request deletion or correction. Visit out page on credit repair for more information.
Save your money. Lenders may be more willing to loan you money if you’ve saved up a considerable amount of money for a down payment. And if you’ve kept up on your payments for 2-3 years, you can usually secure a loan to purchase a new home. Want to find out more? Read about the Pre-Approval process and how it is important when purchasing a home.
So that is life after bankruptcy. Hopefully you have learned how get a mortgage after bankruptcy. Remember that Bankruptcy 7 does not exist, you want Chapter 7 bankruptcy. You should have learned how CA bankruptcy law affects bankruptcy on your home. If you are in Sacramento and considering filing bankruptcy, submit your information below to be matched up with a Bankruptcy attorney.