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Approximately forty-five percent of adults have some form of impaired credit. Millions of people declare bankruptcy every year. The most common reasons for consumer bankruptcy are: Unemployment, Large medical expenses, seriously over extended credit, Marital problems, Large unexpected expenses, Bankruptcy and Bills, etc.
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Is it too bad to declare bankruptcy?
The underlying policy of bankruptcy law is that the honest debtor who is in debt beyond his/her ability to repay the debt should be given a fresh start through the discharge of debts in a bankruptcy proceeding. So, bankruptcy has some advantages:
- Once the bancruptcy court discharges the debts, your debts are removed forever.
- When a bankruptcy gets filed, an automatic "stay" on litigation such as foreclosures and sheriff's sales goes into place.
Bankruptcy is the worst statement on your credit report. Once the debt is discharged you can start to rebuild your credit immediately.
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How soon you can get a new loan?
Three years after foreclosure claim was paid the borrower may be eligible for another FHA loan.
- Bankruptcy information may be reported in the credit history for 10 years, but borrower can get a loan sooner.
- Chapter 7 bankruptcy requires the borrower to wait at least two years from the date of discharge. ;
- Chapter 13 bankruptcy requires the borrower to have been paying on the bankruptcy for at least one year, performance must have been satisfactory and the borrower must also receive court approval to enter into the mortgage transaction.
Compared to ignored or neglected debt, Bankruptcy or negotiated settlement actually improves the credit. The combination of rebuilding your credit and time will eventually bring you back to the world of good credit.
Even after bankruptcy, an individual with bad credit may still obtain a credit card, a car loan or a home mortgage loan. To find out which program fits you best, fill out a Pre-qualification application and we will advice you of the best program and rate.
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