Filing for bankruptcy protections is a difficult decision for many people in California. This can be especially true for those who lost their homes during the recent real estate crisis. However, some may find that a personal bankruptcy offers relief and a chance to rebuild financially.
In fact, some in California may be surprised to learn that after filing for a personal bankruptcy a person may be eligible to apply for a new mortgage in a relatively short period of time. For some, this can occur as soon as 12 months after the discharge of their bankruptcy. The timing for an application for new mortgage credit depends on the type of loan and the Chapter of bankruptcy filed.
In one recent report an official notes that if a person files for a Chapter 13 personal bankruptcy, they may be able to obtain a new mortgage slightly faster than those that pursued liquidation under Chapter 7. In addition, those who lost their homes through foreclosure but qualify for a VA loan may have a shorter waiting period for a new mortgage. In both cases, lenders may require evidence of a positive effort to rebuild credit after bankruptcy.
Filing for a personal bankruptcy is never easy for people in our state. However, learning that they can not only recover financially but also be able to obtain new credit can be a great relief to many concerned about the effects of a personal bankruptcy. In fact, by gaining a full understanding of the process, a person can find that they may be able to not only keep many of their assets but also recover more quickly than anticipated after a personal bankruptcy is complete.
Source: Chicago Tribune, "Getting a mortgage after bankruptcy or foreclosure," Lew Sichelman, Jan. 18, 2013