Buying a home after Chapter 7 bankruptcy

Buying a home after Chapter 7 bankruptcy

| Jul 13, 2020 | Uncategorized |

A successful Chapter 7 bankruptcy includes the discharge of many debts, essentially releasing the consumer from the obligation to repay what he or she owed. This often brings tremendous relief to those who are struggling with overwhelming debt, but it also leaves a dent in their credit scores, marking them as risks to lenders. Nevertheless, many determined Michigan residents who have gone through the bankruptcy process still obtain the dream of buying a home with patience and persistence.

Having a clean credit report can go a long way toward obtaining loans and qualifying for lower interest rates. After a bankruptcy, some despair of ever having a credit score that is good enough to get a mortgage. However, anyone who has gone through Chapter 7 can begin right away to rebuild that credit score. One important step is to keep a close eye on one’s credit history as mistakes on credit reports are common, and they can stall efforts at raising a credit score.

Perhaps the most important step consumers can take in rebuilding credit is to demonstrate to creditors that they can repay what they borrow. By obtaining secure credit cards or installment loans, those who have gone through bankruptcy can gradually rebuild their credit, provided they make full payments on time every month. Late or missed payments will only jeopardize progress they have already made.

For those in Michigan who hope to purchase a home but are currently drowning debt, Chapter 7 bankruptcy may be a worthwhile option to consider. While it may lower one’s credit score initially, as time passes, it is possible to build a credit rating to qualify for a loan. The first step, however, is to obtain relief from one’s overwhelming debt.