Michigan Bankruptcy Attorneys & Lawyers

Posts Tagged ‘Bankruptcy’

Several Michigan Bankruptcy attorneys or lawyers will tell you most people want to own their home and are scared to try to buy a new home after filing bankruptcy. There are some things that will make qualifying for a home after bankruptcy difficult and one of those things is not having good enough credit. You need to improve your FICO score after bankruptcy and you need to save money. If you begin to concentrate on these two things as fact then you will eventually qualify for a home loan after bankruptcy. Doing both of these things increases your odds of qualifying for a home loan after bankruptcy. The time line for filing is also important. You should expect to wait at least 3 years after filing for bankruptcy to be approved for a home. It is possible to qualify in 2 years but your odds decrease of getting approved. If you accept this timeline then you can start on the other factors that will help you get approved after bankruptcy.

Clean up your credit report

You should estimate you will have 2-3 years before you will be accepted by a mortgage company a decent rates. During this time you need to pull your credit report and start challenging anything that is incorrect on your credit report. When you filed bankruptcy you should have pulled a report before paying your bankruptcy fee. You should use this report as a comparison. When beginning to look at your report you should make sure that the report shows “balance due” as being reduced to zero on all of your lines of credit unless you reaffirmed your loans (car, home). The report should show your discharge date on the report. One of the sneaky things creditors will continue to do is report negatively on your credit report. An example is that you are not paying on something that has been discharged. This is something that you need to continue to challenge to help improve your FICO score.

Improve your credit after bankruptcy

One of the biggest problems for people who file bankruptcy and were reluctant to file is their lack of wanting to obtain new credit after bankruptcy. It makes sense that you don’t want to get new credit if you did not manage your credit wisely when starting out. However, if you ever hope to be able to pay less for things you will need to rebuild your credit. You can always save your money and buy a home or car with cash but the truth of the matter is some people don’t have the discipline to save that type of money and if they did they most likely would want to invest the money to see a return on the money saved. To overcome this fear the person filing for bankruptcy should not apply for credit for the first year out of bankruptcy. You should be living on cash to prove that you are disciplined and you do not need credit to live your daily life. However, once you are a year out of your discharge you should apply of an unsecured credit card. Do not apply for a secure credit card because this will put you in a different type of list or class for people holding credit cards. This was the point of not applying for credit during the first year. You want to prove to creditors, credit report and yourself you do not need credit for every day living. Once you apply and are approved for your unsecured credit card you will want to use the card and you will want to carry a balance on the card. Several credit experts will tell you to pay off the balance in full each month.  You do not want to do this. You want to show the creditor that you are able to carry a balance and pay in a timely manner. You will want to pay more than the min. payments on your card each month. Paying more on your credit cards each month will help rebuild your credit. Once you have improved your credit this will help you qualify for the lower home rates allowing you to have the smaller house payments.

Saving money for a home down payment

If you have a FHA loan or a VA loan and your home was foreclosed on you have to wait at least 3 years before you can apply for a loan using one of these programs. However, if you just filed bankruptcy and did not lose your home then you should be able to get a home with in 2 years of bankruptcy using FHA or VA. Since you will be have to wait a minimum of 2 years you need to start saving money. Your goal should be to put down 20% of the total home and only finance 80%. The chances are good you can get 90% financing but you want to be prepared. So, if you want a house that costs 100K you should expect to begin to save twenty thousand dollars to put down on the house. If you don’t have a house with equity you should be saving $555.00 a month for 36 months to put down on a new home.

If you had significant debt and you filed bankruptcy you should not have any problems saving this money unless your house payment is really high and the value of your house has dropped and you have no equity. Filing bankruptcy is not the end of the world. However, neglecting to plan for your life after bankruptcy can be a big problem especially if your goal is to get a bankruptcy home loan after you have filed.