Salt Lake Foreclosure Know The Consequences Of Filing For Bankruptcy

CC Brown Law Office: Often both the Individuals and the companies reach a level of financial difficulty, which can made them to declare bankruptcy

. Indeed, there are situations where choosing bankruptcy is the most logical course. At the same time, bankruptcy filing should never been seen as an easy way to get out from under a mountain of financial liabilities. There are consequences to filing for bankruptcy, knowing what to expect is the first step in deciding what is best for you. The consequences should be carefully weighed against the benefits. Here we have listed some,

One of the most important consequences of bankruptcy is that, if the bankrupt person wishes to buy a house in the future, there should be a two-year wait after the Chapter 7 case is discharged before they will be deemed eligible for a home loan. When a Chapter 13 bankruptcy case is involved, the wait is twenty-four months after the debts are paid off in full. During that two-year period, the loan applicant should be employed steadily, should not have any negative entries in their credit file, and kept debt under control. If the applicant can able to make a large down payment of 15% to 20%, there will be no problem getting a home loan. For less than that, the interest rate will probably be high. If a borrower has to get a loan at a higher rate, two or three years of a perfect payment record may make a lower interest rate possible through refinancing.

Loans after bankruptcy are not that much easy to obtain as before the case was filed, and it based on what kind of loan a person is seeking just how difficult the process will be. Once the discharge of the Chapter 7 or 13 has been granted, the debtor can reestablish credit, and the first step will probably be a secured credit card. A secured card is given by the bank, and is secured by whatever amount of money the cardholder deposits in an account for that purpose. Charges are then limited to the amount deposited, which helps avoid running up too much debt again, but allows the positive credit experience to be reflected in ones credit report. This step helps make the debtor eligible for a loan.

The recommendation for regenerating the credit is to establish credit with four creditors, including one or more secured credit cards. Stores and credit card companies will often let the people with bad credit histories to obtain credit from them, but the charge limits will be low, and the interest high. Another tip to increase the chances of loans after bankruptcy is to ask providers of gas heating, auto insurance, water, and phone service if they will give a clean credit reference letter to a post-bankruptcy customer after twelve months of on-time payments. Even though one of the consequences of bankruptcy is that the bankruptcy stays on the persons credit record for ten years, these other positive events are certainly going to be helpful to a persons overall credit rating.

Quite often the reasons for a person declaring Chapter 7 or 13 in the first place had nothing to do with irresponsibility, so the consequences of bankruptcy seem harsh. A serious illness or accident, or loss of employment, can wreak havoc in a familys budget. Keeping up with bills when income has ceased can be next to impossible, so the courts provide the only answer. In such kind of situations, the individual responsible is not careless about his credit, so getting his reputation back and loans after bankruptcy will be easier than it will be for the person who just got too hooked on having more things until there was just too much to pay back. That habit is hard to break.

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by: CCBrownLaw

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