Auto Financing After Discharged Chapter 13 Bankruptcy
auto financing after discharged chapter 13 bankruptcy
Steps to Consider For Qualifying For Mortgage After Bankruptcy
Bankruptcy can be difficult especially the long process that comes with it. But after the bankruptcy discharge has been issued, it is important to create good credit again for future purposes. You would want to boost your chances of qualifying for a mortgage after bankruptcy, it would be better if you can correct your past mistakes first, learn from them and take necessary steps to rebuild your credit.
Because your credit rating has taken a heavy blow and you will be much less an attractive prospect for potential lenders, rebuilding your credit as soon as possible is a crucial part in recovering from bankruptcy. You have to understand that the type of bankruptcy you filed will decide the amount of time it stays on your record. When you filed for Chapter 7 bankruptcy the amount of time it will stay on your record will be ten years. Chapter 13 bankruptcy will stay on your record for seven years. Although there is an amount of time that creditors will see that you have a bankruptcy discharge on your record, it does not mean that you will not qualify for credit.
First thing to remember for qualifying for mortgage after bankruptcy is to not apply for another credit. The last thing you want to avoid is getting in debt again after bankruptcy. And as you will find out, it would be hard for you to obtain credit for around a year following bankruptcy discharge. Most lenders will want to wait for at least two years before they allow their bankruptcy discharged client to apply for a mortgage. In some cases though, you can be able to apply for a mortgage eighteen months or so. This will all depend on your financial status between the times of your bankruptcy discharge date until the time of your mortgage application.
The second step is to start new credit accounts. This may sound scary, but if you do not make the same mistakes as what you did before everything will go well. You will need to open new credit accounts to boost your credit scores. New credit accounts may involve opening new major credit card, store credit card, automobile loan, and so on. And once you have secured obtaining these types of cards, you will need to do three things. These are, to always make your timely payment, maintain low balances, and payoff the balance every month.
Lenders will see that you are financially responsible if you handle you cards well and maintain regular and well-timed payments. Being financially responsible will allow you to qualify for an unsecured credit card. Also, within two years you may have the privilege to get a mortgage or auto loan. If you are thinking of applying for a mortgage earlier than the two year period, you will have to search for a lender that can help you approve mortgages for people that had bad credit standing. Do not be surprised if you find out that this type of lender requires larger deposit and have high interest rate, because that is how the way it is. But if you really want it sooner than two years, then this type of lender is your best choice.
About the Author
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I Can’t Pay my Loan-Student Guidelines for Recovery
You graduated and now your student loan is due. The job hasn’t come through yet, or you are just in over your head. What can you do about that student loan?
Before you enter the default stage, relax and review your options. Realize that you aren’t alone. Unfortunately, since so many former students default on their loans each year, the Department of Education has a well-oiled process of collecting payments from those who default.
If you just stop paying, or never begin making payments when they are due, you can expect the Department of Education to take action to collect your student loan. There are several drawbacks to procrastinating. First, they will add substantial collection fees to your outstanding balance. You owe enough already, but they are going to want extra to track you down and force you to pay.
The IRS works closely with the Department of Education, and they’ll take any tax refund that you might be due. That’s right, they’ll turn it over to the Department of Education without a second thought.
Finally, once you do get a job, they can garnish your wages. Not only will they get the collection fees and hit your take home pay, but your employer will know you defaulted on your loans as well.
If you default, your credit will be damaged. This will prevent you from getting the best available financing deals, a mortgage and possibly even a job.
Want to avoid all that hassle? First, realize that you do have options. Shirking your responsibilities should be the last option. Contact an Ombudsman at the Department of Education (877-577-2575). Review your options and choose one that you can live with.
You may be able to defer your loans. This program allows you to defer, or put off, payments on principal, interest or both under some conditions. If you’re out of work but looking for a job, experiencing a financial hardship or going back to school you may be able to put off paying for awhile. You must apply and be approved, so be proactive and request the paperwork from your lender before you find yourself in default.
Most loans have a provision for cancellation. However, canceling a student loan is very difficult. If you meet one of the requirements you can apply for a cancellation by completing a form provided by your lender. Some of the qualifications include total disability, either permanent or temporary, death, providing instruction or other services to needy populations or entering a rehabilitation program for your disability. Serving in one of the armed forces may also allow you to cancel your student loans under certain circumstances. Cancellations are hard to obtain and will always require documentation of your condition or situation.
If you find yourself in extreme circumstances, student loans can be discharged through certain types of bankruptcy. However, you must be able to prove that if you repaid the loan you would suffer severe financial difficulty, and most student loans can only be discharged through Chapter 13 bankruptcies in which you must repay a portion of your debt (usually pennies on the dollar).
Whatever your situation, deal with your student loan problem before it enters default. Whatever choice you make, don’t ignore the problem. It won’t go away, it’ll only get bigger. Contact the Ombudsman at the Department of Education or your lender before you find yourself in default.
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