Bankruptcy
I have a friend who's wife is filing for bankruptcy. He's actually happy about it, because he says that he spoke to some financial expert that works with bankruptcies, and that bankruptcy is not the stigma it used to be. He says not only will they be saving money every month by not having to pay those two credit cards, but that her credit will be fine in less than five years and that her credit does not affect his credit.
I asked how it would look if they were to apply for a loan for a new home in the next couple of years, and he said even mortgage brokers don't see it as a really big deal.
Sounds like he was fed a bunch of bullhockey to me - can anyone tell me where to look this up? I would think a bankruptcy would be a major red flag to any lender, and I thought it took 10 years to clean up your credit after that.
Lady,
There will be more posts that know better than me but since there are none yet I will say this, Bk is very bad to have on your credit! However there are some lenders who will work with a Bk after a few years. Of course it will be at a less favorable rate. Hope this helps.
Lady,
There are lenders who will lend one day out of bankruptcy. But they are all sub prime lenders. This means the borrower will have to pay a higher interest rate, and the mortgages typically have pre-payment penalties. It is not pretty.
On the other hand, if they are able to make payment arrangements with their lenders, and go a year or two without any lates, they should be good to re-establish their credit.
If your friend can qualify on his own, without using his wife's income, then it probably will not hurt him, and their ability to buy a home in the future. But, if he needs her income, they will have to use her credit as well.
A BK is not bad on a credit report, what is bad is not paying your other creditors in a timely manner after the BK It is OK to file BK, but it is not acceptable to do the same thing again. You can get a conforming mtg two years after filing as long as it has been discharged
[addsig]
Greetings,
BK is not necessarily bad if you make the payments after that point ON TIME. And accounts jointly with the wife are now subject to the creditors for review. I.E. credit cards have the right to increase interest rates according the new status.
The 10 year rule is "up to 10 years" after a BK. It doesn't necessarily have to be 10 years and they probably won't pull it off the records unless you notify the credit bureaus individually and specifically. Of coarse, stuff can be disputed if it is inaccurate, outdated, misleading, incomplete, unveri-fiable information, at any time.
Good Luck,
Dbizman
There are lending programs that require that a person only be one year out of bankruptcy. If there is immediate interest in purchasing a home your friend can purchase in his name and still qualify for a loan by including his wife's income. He can add her on title later.
That being said, hopefully, they might find another solution other than bankruptcy.
It IS 10 yrs. And you can not even buy a tire at Sears.
Good Luck, Herb, WPB, FL
Yeah that is craziness. I am a mortgage broker. Filing ANY type of BK 7, 13 , whatever, makes you look like you are irresponsible with your finances. Which in this case, seems true. I don't know why you would file BK unles you absolutely had to. You cannot get a loan, your credit goes DOWN SEVERELY, if you can get a loan, your rate will be astronomical. Fannie/Freddie usually want you out of BK for AT LEAST 3-5 years. It will stay on your credit for 7-10 years... if taht doesn't seem like a big deal, then I guess it isn't a big deal . But from a lenders point of view... BIG DEAL!
Thanks for all the input. Reinforces my belief that BK is a very, very bad thing.
avoid b/k at all cost. it will totally destory your credit......km
after 7 yrs, bk doesnt mean squat to mortgage/bank campanies. :-o
Hello,
BK? Stigma, yes. Getting a mortgage? Problems. Why would anyone want a mortgage? We are creative, aren't we?
Thanks,
OTW :-D
Mr. Bk, I'm a mortgage associate, you had one reply, that said, "that there were lenders that would give you a loan one day out of BK", that's right!, However the interest rate would be high (subprime). At all cost if you can avoid BK, I would advise against it. Everyone's situation is a little different, keep getting advise.
Bankruptcy stays on your CRA reports 10 years unless you find a creative way to knock it off, and even then, most apps have a box you must check (or else it's fraud).
In order to have a decent FICO score post-bankruptcy, you need to have had one going into bankruptcy, which is only possible if you are current on all your bills but realize you have been dealt a crushing blow (like huge medical expenses), and consequently file as soon as you comprehend that filing is a necessity rather than letting the problems fester to become lates, collections, etc.
If your credit is already a mess, there's no hurry filing bankruptcy ... you can wait until something serious like garnishment or bank account seizure is in the offing (or even wait until after it happens and undo it) ... sites like www.budhibbs.com will give you the lowdown on becoming an artful-dodger type if you think that's what you must do. Or you can go over to www.artofcredit.com (where Lizardking and Flyingifr hang out) and go beyond the artful-dodger tactics to the "predatory consumer" tactics where you use the creditors' and bureaus' inevitable screwups against them in order to tag them with FDCPA and FCRA violations in court and actually *make* money (some say in the $15k range annually) from them.
The choice is according to your capabilities and conscience.