After Bankruptcy...Well, almost. If you have declared bankruptcy, it will appear for a certain period on your credit history. Bankruptcy often results in previous lenders probably not getting back all of the money you owed them. Therefore, if future lenders see that you have declared bankruptcy in the past, you might be considered to be a high-risk candidate for new loans, because you might not have changed. Getting a mortgage after bankruptcy can be especially difficult, but there are ways to go about doing it.
Building Up Your Credit Rating AgainFirst, building up credit – good or bad – takes time. If you declare bankruptcy, you effectively wipe out your credit history. However, that includes any good credit you may have had as well. Therefore, you have to start from scratch. Just like a mortgage lender would consider a young adult a high-risk candidate because he or she has little credit history, you too will be considered a high-risk candidate. You can explain to your lender about how you’re going to change until you are blue in your face, but a more effective way to do that is to prove it. Build up your good credit again, and wait about two years before even considering approaching a lender regarding a mortgage. Furthermore, you should consider presenting a greater down-payment when you do apply for a loan since being able to generate a savings amount does require both discipline and stamina, and will be useful in proving that you have changed.
You can sometimes use special government programs to help you get a mortgage. Some will work with you to put less money down on your new home and to convince a lender that you should qualify, even if you have declared bankruptcy in the past. If you have a solid income now and are working to pay off debts, you can probably qualify for some of these government programs. Such governments programs mainly exist in the US, but there might be other countries which supply similar opportunities.
You can also use your current home as equity to convince a lender that you should qualify. The less money your want to borrow, the less risk you are to a lender. Therefore, if you can pay for the majority of your new home by selling your current home, your lender will be more likely to overlook the fact that you’ve declared bankruptcy in the past.
The real lesson here is that bankruptcy should not be declared without duly considering the long-term consequences. You need to make absolutely sure it is the best option for you. Bankruptcy should be your last resort financially, because it could make it more difficult to get a mortgage in the future.