Dallas Bankruptcy Blog

Every once in a while life throws someone a curve ball, or they might make ill-informed decisions. Sometimes it is easy to get out of the kind of messes that these situations create - other times, it will take a lot of work.

Bankruptcy is one of life’s curveballs that is not easily dealt with. If you take a really good look at the world we live in today, you will see that it basically revolves around credit.

There is almost no one who pays cash straight out for their car or their home. Even everyday items such as television and shopping are increasingly charged on credit instead of being rung up free and clear.

As a result, more and more people are finding that bankruptcy is their only option.

In this article we are going to specifically talk about long-term strategies that will help you have a better chance at getting credit post-bankruptcy for the two most important big credit items: a car or a home.

Have a Strategy

The most important part of looking toward the future after a bankruptcy (we are assuming a discharge of the bankruptcy in this article, for advice on getting credit while in Chapter 13 take a look at some of our other articles) is being able to see things in terms of consequences and rewards in the long term.

What this means is that once your bankruptcy has been discharged, you will have to make a commitment to rebuilding your credit if you ever hope to get good terms on any loan, and easily qualify for a loan, in the future.

You need to start by analyzing what went wrong last time. How did you end up going bankrupt, and how can you prevent it the future. After that, there are a couple of easy steps to take.

• Make a budget . Know what you are going to spend, why, and when.
• Stick to it! Stick to that budget no matter what. Most of us get in financial trouble with our wants, not our needs, so make sure you are only spending where you need to.
• Never miss a payment . Never miss a payment on credit cards, your rent, your car loan when you get it, or anything else. Every payment is a mark in your favor when it is received on time, and will help you re-build your credit score.

In another article we will take a look at the specifics when it comes to receiving credit for a car or home loan after a bankruptcy, but for now the main point is this: rebuild your credit over the long term.

Once you are able to do this, your bankruptcy won’t haunt your future.

In a separate article we took a look at the importance of long term planning when it came to recovering from bankruptcy in order to qualify for a car or home loan.

In this article, we are going to take a look at some specific time frames so you have an idea of what to expect when it comes to your ability to purchase a car or home (and almost everyone needs credit to do this today!).

Obtaining Credit for a Car

In most cases, you will find that even though your credit score is still fairly low, you can gain credit for a vehicle almost immediately after your bankruptcy is discharged.

In fact, there are companies who specialize in providing loans to people considered high credit risks, and that includes car dealers. All you have to do is some research to find out who and where they are.

Now, just because obtaining this credit is possible does not mean that it is easy. Everything comes with a price, and the price for a successful credit application for a car loan after a bankruptcy is guaranteed to be high interest rates.

Don’t expect to find dealers who offer 0% financing to you; in fact, the credit that you are advanced is likely to come with some stiff interest terms.

This can be pretty hard to swallow, but once again it is important to take the long view.

While you are may pay through the nose in interest (at least initially), every payment you make will go towards rebuilding your credit score. Every time your rating goes higher, you have the chance to get a loan from a source which will charge less interest.

Keep checking around even though you have secured credit; you will eventually be able to secure loans from companies and dealers who offer better interest terms. Take the loan and pay off the higher interest one, and keep doing this until you are back to low interest rates.

Obtaining Credit for a House or Apartment

Obtaining credit for the purchase of a home or an apartment for a person who has declared bankruptcy is a little bit more difficult, simply because houses are a higher risk in terms of price than vehicles.

Even the most flexible (again, read higher interest!) mortgage lenders will want to see two years of clean credit history since your bankruptcy filing was discharged. Default on any payments on anything during this period, or even a late payment, may hurt your chances at getting that loan.

Of course, companies are not the only place to look when it comes to getting credit for a car or home loan after bankruptcy, although for many individuals they may be the only viable ones.

You can also seek to obtain credit from friends or family through an outright or co-signed loan - but remember that defaulting could have lifelong consequences.

Make no mistake about it - if you are currently in Chapter 13 and are looking for a mortgage, you are in a bit of trouble. Most companies will probably tell you to take a hike once they realize the situation, and there is no way that you can hide your situation from them.

Difficulty does not equal impossibility however; in this article we will provide you with some tips for getting credit for a home loan while you’re in Chapter 13 Bankruptcy.

• Sell your current home . Remember, Chapter 13 involves a written plan and by following this plan you will eventually pay off your creditors. You don’t have to sell your property in order to pay off the debts, there is no liquidation involved.

  Moreover, your creditors can make no attempt to gain money from you outside of the bankruptcy court; you are probably much freer than you realized.

  Since you still have assets, it makes sense to make them work for you. If you are lucky enough to already own a home, you can sell it and use the equity as a down payment on a new home.

  This should be a sign to most lenders that although you are in a Chapter 13 Bankruptcy, you can still handle a mortgage.

• Explore different lending sources . Of course, if you don’t already own a home getting credit will be really difficult. During the introduction we stated that most companies will tell you to take a hike when you are in Chapter 13 and are looking for a home loan - but that doesn’t mean everyone will.

  The first place to start is with friends and family; they might be able to extend you some credit for a house purchase. Failing this, look around at different lending companies.

  Not all will say no; some specialize in this type of situation and will extend you the credit you need.

• Find a co-signer . There are other options when it comes to family and friends beyond the actual lending of money.

  You may be able to get the credit you need to buy through the help of a co-signer. This will mean that the individual who agrees to co-sign will be responsible for the debt should you default.

Remember that being in Chapter 13 is a long process, usually from 3 to 5 years. That is plenty of time to clean up your act and put a new plan in place, one which will allow you to apply for and be able to pay loans on a house.

The most important part of the process will be shaping a plan by which you can ensure creditors that you are once again a safe person to extend credit to.

Copell , Texas is a lovely place to work, live, and to do business in - but if you have to file for bankruptcy, then you will probably be too tense to notice anything else.

Here are a few bankruptcy FAQ’s –and their answers – to put your mind at ease.

Is My Financial Future Finished Due To Bankruptcy?

No, of course not!

Filing for bankruptcy is just the first step to admitting that you have some financial problems. On the contrary, filing for bankruptcy will show that you are willing to make tough decisions and get your finances back on track.

Let the bankruptcy attorneys at Allmand and Lee put their 20 years’ combined experience to work for you today.

How Will It Get My Creditors Off My Back?

Once you file for bankruptcy, you get an automatic stay on any recovery process that your creditors might have initiated, be it calling you at home or work, or harassing you with threatening phone calls.

Which Chapter Is Suitable For Me?

You can try filing under chapter 7, in which all your non-exempt assets will be disposed of by a trustee appointed by the court in order to pay off your creditors.

The remaining amount could then be discharged or canceled - and you could start your new financial life within around 4 months. You can lose substantial assets in this move, but you can get out of your debt much faster.

You will, however need to pass the “Means Test” - where your income will be compared to the average income of a similar household in Texas. If your income is lower than the average median income, then you be allowed to file under chapter 7.

If you do not qualify to file under Chapter 7, then you might have to file under Chapter 13. In Chapter 13, your debts will be restructured and a new repayment plan will be devised to clear all your debt within a timeframe of 3 to 5 years.

You may also be able to hold on to almost all your assets by filing under this chapter.

Will I Be Debt Free If I File For Bankruptcy?

There are some debts, such as certain taxes, student loans, alimony, childcare, etc, which cannot be discharged in bankruptcy - and you will need to pay them off.

There may also be certain other debts that your creditors might prevent from getting discharged by petitioning the court.

Can I Get New Loans After My Bankruptcy?

Although your bankruptcy will stay on your record for the next 10 years, you will still be eligible for a new loan after a couple of years. You can try getting a secured credit card first and build up your credit by making your payments on time.

Over time, your credit score will be high enough to secure credit at normal interest rates.

The above FAQ’s should help you to contact the perfect bankruptcy attorney in Coppell. Doing so will ensure that your case is discharged in the shortest possible time, and will put you back on the road to financial recovery.

If you have undergone the pain of filing for bankruptcy under chapter 7 or 13 in Dallas, Texas, and have gotten a discharge in your bankruptcy case, then you can get a mortgage to buy a home.

However, you will find that the rules of the game have changed since you’ve filed for bankruptcy.

Here are some tips to help you get a mortgage.

Continue Paying Your Debts According To Schedule

If you filed for bankruptcy under chapter 13, and if you are still paying off your car loans on cars or other assets, then you should continue making your payments.

Take care as to not to miss any installments, since you will immediately draw attention to yourself as a bad credit risk.

Once your bankruptcy is discharged, then you will be eligible to apply for a new mortgage. However, if you have filed for bankruptcy under chapter 7, then you will need to wait for 2 years until you become eligible to apply.

Arrange For a Secured Credit Card

You will be able to arrange for a secured credit card by paying a suitable deposit. The main aim here is to spend money through the secured credit card instead of cash. You should pay the bill on time, since this will ensure that your credit rating keeps improving.

This strategy will pay off when you decide that it’s time to get a new mortgage. You can also try to get an unsecured credit card as time goes by, as this will also help to boost your credit rating.

Start Saving Money for the Downpayment

Once you have your other payments under control, you will need to start saving for the downpayment on your mortgage.

In most cases, borrowers have to arrange for a downpayment, which could be as high as 20% of the value of the mortgage.

If your credit rating has made a comeback due to timely payments on your secured or unsecured credit card, then there are many lenders who will be willing to extend credit to you.

Your initial interest rate may be a bit higher than usual; however, if you make the payments on time for 1 or more years, you could refinance to a lower rate.

Do Not Default On Your New Mortgage Payments

It is essential that you make your mortgage payments on time; otherwise, you could find yourself sliding down the same path that got you into trouble the first time.

By making your payments on time, you will also be ensuring that your credit rating climbs at a faster rate than before. Soon, your credit score could be quite high, and you will be able to get credit cards or loans at normal interest rates.

All is not lost when you file for bankruptcy in Dallas - but time and strict control over your finances can quickly get you back on track.