There is no question that a bankruptcy does affect your credit rating, and in fact tends to remain on your credit history file for about ten years.
Just because there is a bankruptcy in a person’s credit history does not ultimately mean that they will never be able to buy a home after a lender does a credit check. While a bankruptcy notation does stay in a file for about ten years, it doesn’t mean that some form of credit isn’t available to people in this situation.
“In fact, and this is interesting,” said Chicago bankruptcy lawyer Jay F. Fortier, P.C.,” there are various creditors who deliberately search out people who have been through a bankruptcy simply because they now have a clean financial slate, and that would mean it would be easier to make monthly payments.”
While this may seem a bit perverse, offering more credit to someone who has just gone through bankruptcy because they were unable to handle their debt load in the first place, evidently creditors are having a certain level of success extending them more credit. This may come in handy if that credit happens to apply to purchasing a home. “The interest rates will be higher, due to the bankruptcy on file, but a loan is still likely available through some lenders,” added Fortier.
Even if the interest rates are higher to begin with, if the payments are met consistently over the period of the loan, this will greatly improve the credit rating over time. Any time a person is able to demonstrate that their bankruptcy is in the distant past and there have been no problems paying loans or bills since then, credit ratings are upgraded.
“One of the best ways to restore a credit rating after bankruptcy is to actually buy a house, and then maintain regular payments,” outlined Fortier. So while going bankrupt will create some problems with a person’s credit history, it is entirely possible to restore that history to a healthier one. It’s a matter of personal choices. The choices to make the payments consistently, refrain from irresponsible spending, and keeping current with other financial responsibilities.
While restoring a tarnished financial history is possible, it won’t be accomplished without some glitches along the way. These problems, as well as how to decide if bankruptcy is the right solution, are subjects to discuss with a highly trained bankruptcy lawyer such as Jay F. Fortier, P.C., in Chicago, Illinois.