Bankruptcy is a legal proceeding that most people do not have to deal with in their lifetimes. That being said, however, bankruptcy is necessary, and it can help you get the best overall result in terms of getting your finances back on track and being able to pay off your debt. With bankruptcy, there are some concerns that people may have regarding what type of credit they are going to be eligible for after bankruptcy. Jacksonville bankruptcy lawyers can help you figure out what is going to work best for you and what next steps to take.
What is Bankruptcy?
It is helpful with a legal proceeding like bankruptcy to take the time to learn a bit about what it is. Bankruptcy is a legal proceeding in which the person filing is going to be able to either reorganize and pay their debt back in a way that is different from what they originally agreed to, they can get rid of debt totally, or they can sell off some assets to pay back what they can. Bankruptcy first and foremost is a debt relief option for those individuals that simply cannot pay back the debt that they are currently being held to.
There are several types of bankruptcy, and a great lawyer is going to be able to talk you through the different types of bankruptcy to help you find out which one is going to best suit your needs. They can help you learn about chapter 13 bankruptcy, the most common for single filers, chapter 7, and even chapter 9, and they can help you figure out which one works best for you.
The bankruptcy process is not super complicated, but there are certain steps that must be followed. The first is petitioning the court to see if you qualify for bankruptcy. This means determining if you have enough debt and a low enough income that you will not be able to repay the debt. Also, if you have a large number of assets that might be able to pay back your debt, you may need to sell those assets before any of your debt can be written off.
The next step is the paperwork and the footwork to get the most accurate filing possible. Your lawyer will ask you to write down what your monthly expenses are, what your income is, what your assets are, and they will also ask for a list of your creditors and a list of the debts that you owe. You will also need to go through a short counseling process that will help you manage your money after bankruptcy, and you will need to finish filling out any paperwork that might still be left out.
The last step is the actual proceeding, you will have to go to court to have your bankruptcy approved. Your attorney will notify your creditors to give them the opportunity to refute the bankruptcy and then your proceeding will be approved and filed.
Can You Still Get a Mortgage After Bankruptcy?
Many people assume that bankruptcy ruins your credit for all time and that you are not going to be able to get any sort of major loan ever again after you file. This is not the case. While your loan options may have changed, they are not gone completely. When filing for bankruptcy, if you do have a mortgage already in place you can reaffirm that loan and keep paying it back, you do not have to get rid of your current mortgage just because you are going through bankruptcy.
Similarly, after you file bankruptcy, you do not have to forgo loans altogether. The main difference after bankruptcy is that your interest rates may be higher, you may have a harder time getting very large loans, and you might need a cosigner in some cases. When dealing with a mortgage after bankruptcy, the longer you can wait, the better. The further you are from your bankruptcy the better your options for mortgage approval are and the better overall rates you are going to get in terms of interest rates.
If you have a cosigner, you are also going to have a better chance of getting approved for a loan. When it comes to recovering your credit after a bankruptcy, the first thing you need to do is to take the time to pay off any debt that you held onto and that you reaffirmed. If you keep your car loan, make sure you do not miss any payments, if you keep your home loan, keep paying on time. Paying on time and paying your debts back is going to bring down your debt to income ratio and is going to help bring your credit up.
Another thing to think about is perhaps taking out a very small line credit card. You can use it and pay it off monthly which can certainly help you to pay off your debt and build up your credit. When it comes to bankruptcy, it does bring your credit score down, it does affect it, and it does make it seem like there are very few things left in terms of options. That does not mean, however, that you are not ever going to be able to get a home loan or a mortgage ever again.
If you are thinking about getting a mortgage following bankruptcy, it may be beneficial for you to take the time to talk with a financial advisor and figure out what is going to work best and how to go about getting a loan. Bankruptcy is a new beginning, not the end, and you can qualify for a mortgage again.
