How Soon Will My Credit Score Improve After Bankruptcy?
November 10, 2021 - 7 min read
This ARTICLE On Rebuilding Credit After Bankruptcy To Qualify For A Mortgage
Homebuyers can qualify for a mortgage after bankruptcy. Bankruptcy is a great tool for consumers to get rid of unsecured debts and get a new fresh start in their financial life. There are many Americans who would benefit from filing for bankruptcy. However, many people think bankruptcy is really bad and will ruin their life. Many consumers are under the impression that you will not be able to buy a house after bankruptcy. This is absolutely not the case.
Bankruptcy is a federal law that enables consumers with substantial debts to get those debts discharged and start a new life debt-free. There are two common types of consumer bankruptcy. Chapter 7 Bankruptcy and Chapter 13 Bankruptcy are the two most popular types of consumer bankruptcies. Homebuyers can qualify for a mortgage after filing for bankruptcy. Capital Lending Network, Inc. offers mortgages one day out of bankruptcy. Government and conventional loans require a minimum waiting period after bankruptcy to qualify for a mortgage.
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Chapter 7 Bankruptcy
Chapter 7 Bankruptcy is more common and is often referred to as total liquidation bankruptcy:
- Chapter 7 Bankruptcy is recommended for consumers who have no job and/or a job that is not stable with little to no assets
- Petitioners for Chapter 7 Bankruptcy need to pass the Chapter 7 Bankruptcy Means Test and there is a maximum household income cap to qualify
- There are certain amount of allowable assets petitioners can keep for consumers who are filing Chapter 7 Bankruptcy
- Petitioners are allowed to reaffirm their home mortgage, cars, and other assets after bankruptcy
The second type of consumer bankruptcy is Chapter 13 Bankruptcy.
Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is the second type of consumer bankruptcy and you need to have a full time job to be eligible:
- Petitioners of Chapter 13 Bankruptcy need a full time job to qualify
- Chapter 13 Bankruptcy is normally filed by consumers with a full time job and/or regular income and those who have assets
- They file Chapter 13 Bankruptcy because they are overwhelmed in debt and need a repayment plan over a course of time
- Chapter 13 Bankruptcy is a court-ordered restructuring of the petitioner’s debts
- A trustee is assigned to the petitioner and allocates a percentage of their monthly wages to pay the list of creditors
The list of creditors will get a reduced amount of monthly payments for the term of the Chapter 13 Repayment plan. Most Chapter 13 Bankruptcy repayment plan is for 60 months.
What Does Chapter 13 Bankruptcy Discharge Mean?
After the petitioner finishes the repayment plan over 60 months, the trustee will recommend to the U.S. Bankruptcy Courts to discharge the remaining balance on all the debts still owed to creditors:
- Once the bankruptcy judge discharges the Chapter 13 Bankruptcy, the petitioner no longer owes any debt and can start a fresh financial start in life
- Most debts are dischargeable in bankruptcy
- Debts that cannot be discharged are federal debts such as student loans, fines owed to the federal government, and debts that were incurred due to fraud
- There is life after bankruptcy
- People can get credit scores to over 700 FICO in less than one year after bankruptcy discharged date
- The team at Capital Lending Network, Inc. can advise our viewers on how to rebuild and re-establish credit after bankruptcy and qualify for a mortgage
In this article, we will discuss and cover Rebuilding Credit After Bankruptcy To Qualify For A Mortgage.
When Should I Start Rebuilding Credit After Bankruptcy To Qualify For A Mortgage
We will cover on rebuilding credit after bankruptcy so you can start getting ready to qualify for a home mortgage.
- We will first discuss on rebuilding credit after bankruptcy discharge date on Chapter 7 Bankruptcy
- Once you file Chapter 7 Bankruptcy, it takes normally 90 days for the Chapter 7 bankruptcy to get discharged
- A discharge means all debts included in the bankruptcy petition have been discharged and the petitioner no longer owes
- This is a good day
- You should start rebuilding and re-establishing your credit as soon as you get your bankruptcy discharged
- How can you rebuild your credit if you just got bankruptcy discharged?
- Who is going to give you credit so you can rebuild and reestablish your credit after bankruptcy
We will show you the steps in rebuilding and re-establishing your credit after the bankruptcy discharged date.
Fastest And Easiest Way Of Rebuilding Credit After Bankruptcy To Qualify For A Mortgage
Homebuyers can qualify for a mortgage after bankruptcy. Capital Lending Network, Inc. offers non-QM mortgages one day out of bankruptcy and foreclosure with no waiting period requirements. However, the down payment requirement on mortgages one day out of bankruptcy and foreclosure is a 30% down payment. If you want to qualify for a government and/or conventional loan with a 3% to 5% down payment or a VA and/or USDA loan with no down payment, you need to meet the waiting period requirements. The waiting period requirements are dependent on the particular mortgage program.
Just meeting the waiting period requirement does not guarantee you mortgage approval. Lenders expect borrowers to have rebuilt and reestablished their credit after bankruptcy. No late payments after bankruptcy are normally allowed. Late payments after bankruptcy and/or foreclosure have been frowned upon by lenders. It is also difficult to get an approve/eligible per automated underwriting system with late payments after bankruptcy and/or a housing event. The key to reestablishing credit after bankruptcy is to make all of your payments timely. Getting new credit is key in rebuilding your credit after bankruptcy. How can you get new credit after bankruptcy?
In the next paragraph, we will show you how to rebuild and reestablish your credit after bankruptcy and get your credit scores to 700 FICO in less than one year after your bankruptcy discharge date.
Non-QM Mortgages One Day Out Of Bankruptcy Versus Government And Conventional Loans
Capital Lending Network, Inc. offers Non-QM mortgages one day out of bankruptcy and foreclosure.There is no waiting period after bankruptcy and foreclosure to qualify for our non-QM mortgages one day out of bankruptcy and foreclosure. However, a 30% down payment is required if the bankruptcy and/or housing event has not been seasoned for at least 12 months. Non-QM loans generally require a 20% down payment on a home purchase.
The borrowers’ credit scores and the down payment determine mortgage rates on non-QM loans. There are mandatory waiting period requirements after bankruptcy on government and conventional loans. HUD, the parent of FHA, requires a two-year waiting period after the Chapter 7 Bankruptcy discharge date. The U.S. Veterans Administration requires a two-year waiting period after the Chapter 7 Bankruptcy discharge date to qualify for VA loans. USDA Rural Development requires a three-year waiting period after the Chapter 7 Bankruptcy discharge date to qualify for USDA loans. Fannie Mae and Freddie Mac require a four-year waiting period after the Chapter 7 Bankruptcy discharge date to qualify for Conventional loans. There is a four-year waiting period after the Chapter 13 Bankruptcy dismissal date to qualify for conventional loans.
There is a two-year waiting period after the Chapter 13 Bankruptcy discharged date to qualify for conventional loans.FHA and VA loans are the only two mortgage programs that allow borrowers during Chapter 13 Bankruptcy repayment. plan, to qualify for a mortgage. However, the borrowers need to be on the repayment plan for the past 12 months. Payments during the Chapter 13 repayment period need to be timely. The bankruptcy trustee needs to sign off on the home purchase and mortgage. It needs to be manual underwriting. Chapter 13 Bankruptcy does not need to be discharged. There is no waiting period after the Chapter 13 Bankruptcy discharge date to qualify for an FHA or VA loan. However, if Chapter 13 Bankruptcy has not been discharged for 24 months, the file needs to be manually underwritten.
Fastest And Easiest Way To Rebuilding Credit After Bankruptcy To Qualify For A Mortgage
Capital Lending Network, Inc. has helped countless clients get credit scores to over 700 FICO in less than one year after bankruptcy discharge date. The easiest and fastest way to rebuild credit after bankruptcy is to get three to five secured credit cards with at least $500 credit limits. If $500 is too much for you to put a deposit on a secured credit card, then start with a $200 deposit. If you cannot afford to get three to five secured credit cards after bankruptcy, start with one. You will be surprised at the wonders secured credit cards can do. Secured credit cards are exactly like unsecured credit cards. Secured cards report to credit bureaus.
When researching secured cards, make sure they report to all three credit bureaus. Never miss a credit card monthly payment. One 30 late payments will plummet your credit scores and the late payment will stay on your credit report for seven years from the date of last activity (DLA). Besides getting three to five secured credit cards, get one or two installment loans that report to your credit report. CLN Mortgage Group highly recommends Self.inc Credit Rebuilder program. Self. inc is a 12-month credit rebuilder program where the consumer will make a monthly set payment of at least $25 or more per month.
Those funds will go into an FDIC savings account. Every time you make a payment, that payment is reported on all three credit bureaus as an installment loan. It is a great way of rebuilding credit after a bankruptcy along with having three to five secured credit cards. Make sure to enroll in a credit monitoring service such as Credit Karma where the service will alert you if there are any new changes in your profile. Follow the above steps and always pay your monthly bills on time and you are on your credit of having rebuilt and reestablished credit after bankruptcy. If you follow the above steps after the bankruptcy discharge, you will have credit scores of 700 FICO or higher in less than 12 months of your discharge date.
Lisa Connelly
Hello Gustan,
I cannot thank you enough for being so “straight forward” about the industry and the requirements to be a successful MLO hopefully one day. I went ahead and paid/made arrangements for collection accts and even got Chase to remove a derogatory account reporting on my credit report, as well so that I won’t be barred from licensing in the different states.
I have a formal offer from a “brick and mortar” mortgage company about 40 minutes away from home (as you advised would be the optimum way for me to get a crash course) , and I am at the final stage before receipt of written offer letters with a few more companies. The pay structures vary, training varies, and how they operate seems to vary, too. I wanted to give you a call and was not planning on taking up too much of your valuable time, but believe it or not, I cannot place your number on my phone. I may try contacting you via the phone number listed online for your company or I will wait for your reply to this message. I just wanted to go over the offers with you very quickly before I made a final decision. I get up super early in the morning and have no commitments of my time in the evenings so I can speak with you whenever it is best for you, if you permit. Thank you and I am so happy that I have an expert to reach out to about this industry and how I should operate in it. Thank you for being so abundant and kind to help me out like you did the day we spoke.
Lisa
Gustan Cho
Congratulations 👏. 👏 👏. Very proud of you. You present very well and have a great first impression both via the email introduction you have sent as well as over the phone. I knew that you were a great catch for any employer and that is what I told you. Seems like I had more confidence in you than you had in yourself. One of the key to become successful in this business is you need to have 100% self confidence in yourself. That sets your foundation. Lets go over your offer letter of employment and I will tell you what I think. Sounds like a plan?
Lisa Connelly
Sounds great, thank you! I should be receiving the remainder of them in the next day or two so I will reach out once I have all of them in front of me. Thank you for your kind words, too.
Laurie McCarthy
We have been renting for over 2 1/2yrs. Found out the home wenr into foreclosure, and now its up for auction. Theyvoffered us with less then a wwek to purchase the home. We applied for a mortgage and found out about the charge off. We are in a bad situation. Have a excellent pym on rent, utilities, etc. Plus have enough income to pay a mortgage. Just need a lender to help us out.
Thank you
Laurie McCarthy
Mary Powell
My lender just recently notified me about a two collection accounts on my credit report with an open date of 4/2020 and status date of 9/2020. According to my Experian credit report, the accounts will be removed from my credit report in Dec. 2023. I have presented this information to my lender along with a recommendation letter from Lexington Law but they still don’t want to approve my loan. I was scheduled to close this Thursday, Oct. 29 and now my lender wants to deny my loan. Even though they pulled my credit report on 9/4/2020 and told me everything was good and that I qualified for a new rate, they didn’t tell me about the collections until about 2-3 weeks ago. I really hoping and praying that you have some lenders that could help me so that I don’t lose my dream home.
Thank you so much and God bless,
Mary Powell
Jose Lopez
Looking to buy my first home so im not paying some one elses home off i want to be able to do this for my family of 6.
Joanne Gross Morales
Well my fiance and I are really wanting to purchase a home and have a down payment of $50000 but he basically has no credit and I have poor credit. This would be first time home loan for either of us. Any advice on what to do?
Jackie Wick
I have a score of 535 and trying to use my VA. I have had good payment history for the last 12 months. Can I get a call to see if you can help.
Bryan Adams
Hello,
My name is Fiona. I am assisting Dawn the Mortgage Loan Processor here at Loan Cabin. I will be working with Jammi on your home loan application for. You will receive disclosures from Carrington for electronic signature in the next business day or two. Please note that the title fees/closing costs listed on the Loan Estimate are over-inflated as we will not have those exact fees until we receive the title documentation from the seller’s attorney/realtor.
Please follow steps below:
1. Attached in this email are the disclosures that require your actual signature, please print all the attached documents for ink signature.
2. Please note that the Credit Card Authorization form is required to be completed with credit card information in order for your appraisal order/change
3. Please complete the attached letter of explanation for credit., The first section is regarding addresses that have been used for a credit inquiry. Please indicate the time frame you resided at that address and if you have/had any ownership interest in that property. The second section is the credit inquiries to your credit in the past 120 days. Please indicate what the inquiry was for and if additional debt was obtained as a result of that inquiry. If so please provide a current statement for that account with current balance and payment amount.
4. Please sign and date the attached Loan application. Be sure to date it on 11/23/2020.
5. Please provide Agent contact information for the company you choose to use to obtain your homeowners Insurance. We will need to verify sufficient coverage prior to closing.
6. Please provide contact information for your landlord.
**Please return the attached disclosures directly to me once signed and completed in PDF format ONLY.**
Feel free to call me with any questions or concerns.