Filing for Bankruptcy Doesn’t Mean You Can Never Buy a House Again
Filing for bankruptcy doesn’t mean the end of your dreams of home ownership or being on solid financial ground again.
In fact, filing for bankruptcy may be the thing to make your financial dreams easier to accomplish. This includes home ownership.
Bankruptcy wipes out much of your debt, including credit card debt, bank and internet loans, and medical bills. While it’s not a simple snap of the fingers and all your debt is gone and there are no ramifications, bankruptcy doesn’t mean you’re doomed to living in a small apartment or crashing on a friend’s couch for decades or the rest of your life.
To see if filing for bankruptcy might be the right thing to do, consult with a trusted bankruptcy law firm, such as Denver-based Wink & Wink. They’ll review your case and make sure bankruptcy is the best solution for your financial situation.
Should I File for Bankruptcy?
People who file for bankruptcy aren’t just people who foolishly blew their money on lavish trips, shopping binges, or flashy cars and mansions. Many people have made sensible financial choices but lost their jobs, their financial situation changed (ex., divorce), or medical bills or debts related to other necessities got to the point they couldn’t keep up with payments.
If the bills become too much and you can’t see a way out, filing for bankruptcy may be the best option. It doesn’t mean you failed or that you’ll never have happy financial times again. Rather, it could be just the thing to get you back on your feet and in better financial shape faster and better.
Houses and Bankruptcy
For many people, their house is their biggest expense. Some homeowners may be able to handle the regular payments just fine, but some can’t. Perhaps they got lured in by tiny down payments or other incentives and bought a house they later realized they couldn’t afford. And it’s not just the monthly mortgage payment either. Upkeep costs can shoot through the roof (no pun intended). Or perhaps the homeowner lost their job or encountered other hardships that made keeping up with payments impossible.
Additionally, the value of your home may go down. Perhaps your neighborhood is now less desirable, or there’s a falling housing market, and your house is now worthless. You might not be able to simply sell it to pay off your debts. You may still owe money to the bank.
If it becomes too much, it might be time to file for bankruptcy.
Bankruptcy won’t keep you in your current home if you can’t pay the mortgage. But it will give you some time to catch up on back payments if that’s the only problem. Additionally, filing for bankruptcy will make sure the bank cannot come after you for a deficiency judgment when they later sell your home in foreclosure for less than the amount you owed.
Talk with Colorado bankruptcy lawyers Wink & Wink and see how filing for bankruptcy will affect your mortgage and what you can expect. Each case is different. They can also help you understand your future options for home ownership.
Buying a House After Filing for Bankruptcy
Bankruptcy will temporarily affect your credit score and make it harder to get loans. But it doesn’t mean the end of your ability to own a home, car, or other things.
Once you’ve filed for bankruptcy and much of your debts have been wiped out, this is a chance for a fresh start. To accomplish this, you should start building up good credit after filing bankruptcy. This will make it possible to buy a house within sometimes just a couple years of filing for bankruptcy. Your ability to get a mortgage after bankruptcy can depend on which type of home loan you’re trying to get (government-guaranteed mortgage or conventional loan), and some other specifics to your case. Typically, government-guaranteed mortgages, such as FHA loans, USDA loans, or VA loans, will help you get into a house sooner.
Here are some good things to do:
- Get a secured credit card, where you deposit the money first and then you’re given a credit limit. Keep up with your payments, and be sure to pay the full balance if you can.
- Set up automated payments or reminders. Pay any debts on time. Missing due dates can hurt your credit.
- Closely monitor your spending. Try to focus on only buying what you absolutely need. Work to build up your savings and get on steadier ground.
- Talk with a mortgage broker. Even if you are not yet eligible for a mortgage or refinance, mortgage brokers can tell you what you need to do to rehabilitate your credit.
Take Advantage of Falling Home Prices
Your previous home may have been bought when housing prices were high. Perhaps your monthly mortgage payments were then quite steep, plus you were saddled with costly repairs or other financial challenges.
Perhaps the housing market is now, a couple of years after you filed for bankruptcy, much more in your favor. That house that would’ve been $500,000 three years ago is now $425,000. You can now take advantage of these falling home prices and get a much better deal. Thanks to filing for bankruptcy a few years ago, your other debts have been wiped out, and you’re in a much better financial situation. This may then be the right time to buy a home.
Filing for bankruptcy can be challenging and overwhelming. That’s why it’s crucial you talk with lawyers who are experts on bankruptcy in Colorado. Denver bankruptcy attorneys Wink & Wink have years of experience helping people get back on their feet. Call Wink & Wink at 303-410-1720, or contact us online to get started today.