Bankruptcy Fear #5
I’ll never be able to buy a house or car again
Here’s a question. Can you buy one now? Probably not.
Most people who seek bankruptcy protection have already had their credit scores tank because they’ve been unable to pay credit card bills and/or other debts. When those payments are not made your credit score will drop.
Therefore filing a bankruptcy, where you discharge all of your unsecured debt, often begins you on a road to rebuild your credit. Of course the bankruptcy filing will be on your credit report. BUT you can’t start rebuilding your credit until you start paying on-time again.
The great thing about bankruptcy is that it will give you the ability to save for a down payment.
You will also be able to create a new spending plan that will allow you to build a fund for “emergencies” so you won’t get in a financial mess again. That’s the surest way for you to be in a position to buy another home or car after your bankruptcy is over.
You will also have the income to qualify for a mortgage, something you probably can’t do now because your debts take up all of your disposable income. While rules for loans are always changing, currently most people can qualify for a mortgage within about two years after their bankruptcy has been discharged.
To qualify for a mortgage, your debt cannot exceed a certain percentage of income per month. If your debt is too high now, you will never qualify, even if you have perfect payment history.
That is why “robbing Peter to pay Paul” will never solve your problems. Many people continue to borrow on one card to make payments on another thinking that on-time payments are all that matters. That is totally wrong! You can consult any mortgage lender to verify this!