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What is bankruptcy?
Bankruptcy is a legal procession to deal with debts that can not be repaid due to certain circumstances. Bankruptcy cases are filed by people of entities that may be dealing with a debt that can’t be paid or harassment by the creditors over it in order to seek relief from their debts and start anew. Let’s see if it is possible to buy a house after bankruptcy.
The two major types of bankruptcy chapters that are filed are
- Chapter 7 bankruptcy
- Chapter 13 bankruptcy
Both of the types tend to have eligibility criteria that you need to fulfill in order to benefit from them. This is normally carried out by a bankruptcy attorney who may decide which chapter is more suitable for you depending upon your financial and employment situations.
What a bankruptcy can and can’t do
While a bankruptcy case can help you get rid of your debts problems, there are certain limits to the benefits it can provide you regardless of which chapter you have applied for.
Here are a few things that a bankruptcy can and can’t do
- A bankruptcy case can be used to get a stay order. This stay order can prevent you from being harassed by the creditor. The harassment involves, imposing or threatening calls, wage garnishments and possible lawsuits. However, it can not stop them from some other activities like collecting support payments or filing criminal cases
- A stay order implies that you can be temporarily saved from being evicted from their property or having their property repossessed by them. The bankruptcy filing can hold down any eviction, foreclosure or repossession and put it on pending until the procession is complete. However, this stay order is temporary and cannot permanently stop the owner from having their property back in case you are still unable to pay for it. In cases where the owner has already filed an eviction judgement, a bankruptcy case may not entirely be in your favor.
- Foreclosures can be halted temporarily by a bankruptcy case but you may lose the property once the case ends especially if you had filed for Chapter 7. Chapter 13 may allow you to carry on with your previous payments and may actually be more helpful in retaining your assets.
- Bankruptcy cases can be helpful in clearing out unsecured debt like medical or utility bills that are overdue. However it can not be used to clear out secured debts or school loans unless a special case is filed and you are able to prove that you are unable to pay for your school loans and will be unable to do so in the future as well. The demands of such cases are not just difficult to meet but also satisfying them is near to impossible.
- Secured debts may lead to the loss of property that you had originally intended to own. This means that you may be required to return the items or property unless you pay for them. In such cases, bankruptcy can only help you get rid of your debt but it may not help you in owning those assets. Secured credit debts may involve things like electronics, jewelry, cars, appliances and furniture etc. Determining a secured debt can be generally done by checking out the receipts or the contract.
- A bankruptcy can not stop your creditor from repossessing their property. After the end of the case, the creditor can use their lien over their property and auction it off to get the collateral. A lien signifies that the property is under a secured debt and if you are unable to pay for it, the creditor has every right to exercise their rights for recompense. The lien on the property may remain until you are fully able to pay the dept. Otherwise after the dissolution of your debt, their property may return to them.
- Bankruptcy processions cannot be used to dissolve the child support or alimony obligations. Even if you do apply to a Chapter 13, you are only likely to get a process or thorough plan to go through with your debt. It may not impact your original debt situation at all.
- Student loans may not be eliminated through a bankruptcy case. In certain situations you can apply for “undue hardships” but your conditions must meet the criteria and require you to prove that you are unable to pay off your debt now and may be unable to do so in the future as well.
- Bankruptcy cases cannot clear out tax debts. While it may not be completely impossible especially if the unpaid taxes are quite old. However, this is generally not very easy to accomplish.
- Bankruptcy cases can not resolve any property fraud that you may have committed. This means that in case you have committed fraud during the loan, they have the right to an adversary procession. They can request the judge to remove your bankruptcy procession and put you on trial for fraud.
- Bankruptcy cannot remove the debts that are caused by criminal cases like DUI (Driving While Intoxicated.
Hiring a Bankruptcy Attorney
When going through a case where you are unable to pay for your debts, you may want to hire a Bankruptcy attorney. A bankruptcy attorney can ensure that your case goes smoothly and that you are able to file for the chapter that is more beneficial for you. Hiring a bankruptcy attorney can be pretty advantageous and here are a few reasons why:
- A bankruptcy attorney is a professional who knows how to increase the chances of success in your case. They tend to have the knowledge and experience to determine what may work out in your favor.
- A bankruptcy attorney can guide you through the whole process and can ensure that you have better planning in dealing with your debt.
- Bankruptcy attorneys have a clear understanding of any debts that can be discharged and can handle the complicated paperwork and research of your case.
- Attorneys tend to have connections within court that enable them to handle bargains or pleas more effectively compared to you. They can ensure that whatever outcome you may have doesn’t completely cause you immediate loss.
- Bankruptcy attorneys are responsible for handling your case and ensuring that you are not falsely accused of any fraud or criminal charges during the procession. This can help your case go more smoothly and end with a favorable outcome.
Hiring a bankruptcy attorney can prevent you from losing the case to your prosecutor’s knowledge and experience. Moreover they tend to have more chances of success. In case you want to file for bankruptcy, you can contact an experienced attorney like San Diego Bankruptcy Attorney for proper legal advice.
Buying a house after Bankruptcy
Bankruptcy processions may have the ability to eliminate your debts but they tend to have quite a negative impact on your credit report. It may become quite difficult for you to apply for any new loans like car loans or home mortgages with such an impact on your credit reports.
However, this does not mean that you can no longer buy a house on a mortgage.
There are proper steps to do things and if done accordingly, there should be no problem for you to buy a house on a mortgage.
- Ensure that you have a bankruptcy discharge. A bankruptcy discharge is a court order that releases you from debt. This means that you are no longer indebted to the creditor and they no longer have the right to harass you over it. In order to apply for a mortgage, you may need a proper bankruptcy discharge so that your lenders can see who they are coming in contact with.
- Your bankruptcy has a negative impact on your credit report and it may stay there for upto ten years. The lenders would definitely want to see through your credit report in order to determine whether you are worthy or not.You may not need to wait for ten years to get a loan again. However, it will definitely be difficult to do so. You need to ensure that your credit report remains accurate and up to date. This can help you in rebuilding your credit gradually.
- Rebuilding your credit may not be easy but you need to do it in order to prove to the lenders that you can pay back your debts. Your options may be fairly limited but there’s still hope.
- Get yourself secured credit cards that are backed by your savings account as collateral. This means that in case you fall short on credit, the creditor may draw the collateral from your savings account. However, you should ensure that all of your payments are on time especially if you are trying to rebuild your credit.
- Go for the option of installments while paying for a mortgage. Installments can help you build up your credit especially if they are paid on time. Though, don’t take installments if you are unable to pay for them on time. Make sure that your timing is right for you. Don’t go on trying for a mortgage right after a bankruptcy. At least try to wait two to three years into savings and get your financial terms better.
While it may not be impossible to buy a house on the mortgage after bankruptcy, it is still better to go through proper financial planning with patience. Bankruptcy can help you get out of your debts but it may leave a negative impact over your credit report. Make sure to gradually build your credit report and go for installments while buying a house. Paying your installments timely is crucial to rebuilding your credit report.This may take a lot of time and patience but it is not impossible.