Undoubtedly filing bankruptcy will have severe and long-lasting effects on your credit score. There is no way around it, and for this reason it should be your last resort as a debt relief option. However, despite this do not be mistaken: bouncing back is not only possible but likely, especially if you take the time and have patience during the credit rebuilding stages. Credit scores are a funny thing---they don't just consider your payment history---and although undoubtedly your credit score will take a serious dive, the amount you owe is also a major part of your credit rating. By filing bankruptcy, you will at least improve this component of your credit report.
Also, when creditors determine whether someone is worthy of having credit extended to them, their credit score is not the only factor they consider (credit cards being the only exception to this). Despite the propaganda advanced by FreeCreditReport.Com and other agencies that tell you "I'm thinking of a number", there are actually a lot of other considerations that are equally important when applying for credit. The following are some common indicators of one's creditworthiness for mortgage loans.
Your Income
Perhaps the single most important determinant of your creditworthiness is the stability and level of your income. Without documented income (especially in light of the recent mortgage crisis), obtaining a loan is much more difficult, although possible. One of the most important things is not just how much money you make, but also how long you have had that particular position. As one would expect, the longer you have had a job with a particular employer the better. Chances are if you are showing signs of stability in this area of your life, your bankruptcy was not recent (less than 3 years ago), and you have a positive payment record since the filing, you will be able to find a lender to offer you a mortgage at reasonable rates.
Your Assets
Another important dictator of whether you will be eligible for a home mortgage depends on whether you have savings or assets you could potentially liquidate in the event that you lose your job or have a sudden reduction in income. If you have bonds, cds, stocks, or cash in a savings account earning interest, this will help significantly when you apply to get a mortgage for your house.
Your Down Payment
The final way to increase the likelihood that you will qualify to purchase a home is to have a sizeable down payment available. In the past a 20 percent down payment was the norm, but today some lenders are accepting as little as 0% down payments for people with great credit histories. In the case of someone with a bankruptcy on their credit report, a 20% down payment or more is your best bet for getting approved.
Avoiding Bankruptcy
If you would rather avoid the long-term financial & credit consequences of personal bankruptcy, you should at the very least consider the other options available to you. For many people, bankruptcy is a last resort after all their other choices have been explored. Believe it or not, there is probably an option that can help you save a lot of money and get out of debt quickly without it. To get a risk-free, no obligation consultation fill out a form today. PayingPaul.Com will refer you to a company who can help!