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Borrowing after bankruptcy

On Behalf of | Oct 31, 2012 | Bankruptcy, Firm News

Many Florida readers know that a bankruptcy filing stays on one’s credit history for up to ten years, and that the financial repercussions can last even longer in some cases. However, most people don’t know that while they are on the road back to a clean credit report they may still be able to take out loans.

Borrowers who have been through bankruptcy are often under the impression that they can’t take out a mortgage after their bankruptcy, but some lending companies offer loans sooner than that. Criteria for each lender are different, and the available loan amounts and interest rates will vary depending on one’s specific financial circumstances. One important factor that will influence a borrower’s ability to take out new loans is how their finances have been handled since the bankruptcy.

For example, if after the terms of repayment for past debt was approved by the court and the case was closed the borrower immediately started racking up more consumer debt on a credit card, that might make it more difficult to take out a mortgage if the borrower doesn’t diligently pay the new debt off. On the other hand, establishing a good recent history of making payments in full each month could help rebuild credit history.

Still, it’s important to use caution when wading back into the borrowing pool, since unexpected circumstances could make it difficult to keep the budget balanced. In general, it’s prudent to take the advice of an experienced bankruptcy professional to help guide the process of recovering from bankruptcy.

Source: Business Insider, “Even after bankruptcy, you are still eligible for a mortgage” Michele Lerner, Oct. 10, 2012

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