Many Missouri residents have used various types of financial tools and strategies to overcome debt crises. Restoring solvency takes time, including wiping the slate clean on a financial record. If a person has filed for bankruptcy, it might be difficult (for the near future, anyway) to complete certain financial transactions, such as acquiring a mortgage loan to buy a new home.
Some people believe it is nearly impossible to re-establish credit or apply for a bank loan after bankruptcy. This is not true, although accomplishing such goals might take a bit longer than it would have if debt relief had not been needed. However, bankruptcy remains on a person’s credit record for several years. Exactly how long depends on which program was used, such as Chapter 7 or Chapter 13.
Mortgage loans after Chapter 7 or Chapter 13 bankruptcy
There are benefits to both bankruptcy programs and separate eligibility requirements. A person might qualify for Chapter 13 but not Chapter 7 or vice versa. The latter typically provides immediate debt relief through liquidation of assets, while the former involves a court-approved debt reorganization to pay down debt and restore financial stability. Chapter 13 takes three to five years to complete and remains on a credit report for 7 years. Chapter 7 stays on a credit report for up to 10 years, and it may be more difficult to obtain a mortgage loan without reestablishing credit in the first few years following a bankruptcy discharge.
Bankruptcy is a valuable financial tool, but it does not necessarily have to prevent a person from accomplishing future goals, such as buying a home. With experienced guidance and support from a Missouri bankruptcy attorney, debt relief options can be explored. Once the best strategy is determined, steps can be taken to overcome a financial crisis and begin laying the groundwork for a stronger financial future.