Foreclosure and bankruptcy is very scary. For most people that go through it, it is completely uncharted territory. If it is something you are confronting you should always seek professional help from a Bankruptcy lawyer and professional chartered accountants before you ultimately choose to file. But below is a few key bits of information to help you out.
What Does Bankruptcy Really Do?
Bankruptcy elimanates debt. Well, some debt, it eliminates unsecured debt and certain liens (like unsecured liens) and it stops creditors from harrassing you. Unfortunately, there’s also a fair amount Bankruptcy can not do as well. Bankrupty does not get rid of student loans, child or spousal support, property liens or stop repossesions. It also lowers credit to 530-540 (ouch)
What You Need To Know Post Bankruptcy
Now that you have filed and been through court what do you do? Well, start with building up your credit. Your lawyer may have some good suggestions on how to do this, we bought a car with a low payment (a lot down, cheaper car, HIGH interest rate), get a secured credit card and opened a cable television account. It is so important to make a budget and stick to it, once you know how to budget you can start working on building up your credit score. If and this is a big if, you don’t miss any payments you will be able to start the home buying process 24 months after your Bankruptcy is dismissed in Court.
Can I file bankruptcy after foreclosure?
Yes, you can. Student loans or IRS debt are both exempt from bankruptcy, so if you have either of those it is a different story.
If I can file bankruptcy after foreclosure, which chapter do I file?
This is a decision that needs to be made by professionals. The most important tip here is to fill out forms HONESTLY and then you will be assigned a Trustee who will then decide what is exempt and non-exempt assets, based on a certain amount of equity in our property (furnishings, personal property, vehicles, life insurance, etc.)
Can I file bankruptcy after foreclosure and ever buy a house again?
You will be looking at roughly 4-7 years before qualifying for a loan again, hopefully you manage to remain debt free and live frugally you will be able to save a decent down payment by then.
Bankruptcy is scary, it hurts your credit and is generally frowned upon but it doesn’t have to be the end of the world. I know that going into court I was almost positive I was going to be thrown into jail and they would take away all of my possessions, my kids, everything. That was not the case, we are now working towards purchasing our second home and over the next year I will be taking you through our recovery process and {hopefully} help you through yours.
