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The Effect Of Chapter 7 Bankruptcy On Your Ability To Get Loans In The Future

7 July 2016 by Kenneth Pierce

If you want to get out of debt fast and qualify for Chapter 7 bankruptcy, you may want to consider using this method if you owe a large amount of money to credit card companies. If you use Chapter 7, these debts will instantly be wiped away, and you will be off the hook for these debts. This all sounds great to many people, but there is a downside. After you file, your credit will suffer, but this will not stop you from having the ability to get loans in the future. If you are wondering how long it will take before you can get a loan, you may want to know the following things.

Chapter 7 is better than Chapter 13

The point of bankruptcy is to get out of debt, and experts believe that using Chapter 7 is better than Chapter 13 if you are concerned with rebuilding your credit right after you file. This is primarily because Chapter 7 is a one-time deal. You will file, go to court, and wait for the case to close, which can take up to a year. Once this happens, you can begin working on your credit immediately.

Chapter 13, on the other hand, requires a repayment plan that will last up to five years. During this five-year period, there will not be a lot you can do to rebuild your credit, which means you will have to wait to begin working on it.

You can apply for credit right afterwards

If you decide to go ahead with Chapter 7 bankruptcy, you should begin applying for one or two secured credit cards once the case closes. A secured credit card offers a great way to build your credit after bankruptcy, and these cards are not hard to get, even for those who have filed bankruptcy.

Once you get a secured card, begin using it every month and paying off the balance in full. This will build good credit history and will help your credit score improve.

You should qualify for a home loan within two years

You should also know that if you have a decent amount of income and find small ways to boost your credit score, you may be able to qualify for a home loan within as little as two years after filing. During this time, you should try to stay debt-free and take any necessary steps needed to help your score increase.

Choosing to file for bankruptcy is a great option when you cannot see any hope in the future for your finances, and it will not prevent you from qualifying for loans in the future. To learn more, visit a bankruptcy law office such as Law Office of Michael Alfano.

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