Waiting – The Hardest Part: Chapter 7 Lawyers Explain Waiting Periods After Bankruptcy

With your credit history in tatters, you will have to wait a bit before you acquire many of the things you’ve dreamed of for so long. You’ve taken the right steps by hiring Chapter 7 lawyers to regain control of your finances. Unfortunately, there are a few things that you will have to wait after bankruptcy.

1. See bankruptcy disappear from your credit report

Bankruptcy can stay on your credit report for ten years, negatively impacting your rating and forcing lenders to take a long, hard look at you before they even want to give you a basic loan. However, after these ten years, you will be free because bankruptcy will no longer be seen.

2. Credit recovery

There is no perfect rule of thumb as to how long it will take to recover your credit from Chapter 7 bankruptcy, although by that ten-year mark mentioned above it should be bright and new again. In contrast, credit recovery is based on a number of different factors. How well you pay your current debts, including your house payments (if you managed to hold onto the house), is at the top of the list and should be a priority in your new budget.

3. Applying for an unsecured credit card.

Immediately after filing for bankruptcy to your Chapter 7 lawyers, you will likely see a variety of credit card offerings claiming that they are interested in helping you recover your credit. Sounds perfect, right? Unfortunately, these credit card “offers” come with essential terms and conditions. They know that you cannot file for Chapter 7 bankruptcy again for eight years, and therefore you will have to find a way to make payments on these high-interest cards. Worse, if you cancel the card, you incur high fees, low limits and end up on your credit. Instead, wait until you raise your credit rating to around 700 before applying for a new card. When trying to increase your credit, try options such as secured credit cards; you deposit money into a certain bank account, and the bank offers you a “loan” of 50-100% of that amount. Using this card every month will help you fund your account faster.

4. Buying a home

Seems like the perfect time for a house hunt, doesn’t it? When you don’t have the debt hanging over your head after getting fired under Chapter 7, it seems like you have more than every paycheck you can spend on things like a new home. Unfortunately, you cannot jump yet. If you are using a VA loan, you will need to wait two years from the date you filed for bankruptcy before you try to buy a home. A more traditional loan will require a four-year waiting period. But don’t be discouraged. Until then, you can start building up your down payment. Take the amount you want to spend on the house every month and put it into your account for buying the house. After four years, you will have a sizable down payment that will make it much easier for you to get the loan you want.

5. Return to your old way of life.

Now that you have reduced or paid off your debts, you have more money, but this does not mean that you should immediately return to your old way of life. Remember that it was these overspending habits that led to your bankruptcy in the first place. Take time to develop good spending habits and wait for your employment status and income to change before trying to meet those standards again.

Filing for bankruptcy after hiring Chapter 7 lawyers is a scary time in your life. Recovering when it’s over can be even trickier. For more tips and advice on managing your post-bankruptcy finances, contact us today.

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