This is not the case. Typically you will be charged a slightly higher interest rate (1 -2% points over conventional rates), but you will find that with an improved debt-to-income ratio after a bankruptcy discharge, you may be in a better position to qualify for the loan in the first place. Many clients get credit solicitations shortly after filing.
Filing for bankruptcy prior to a foreclosure sale will actually shorten the period of time it takes to rehabilitate your credit. If you experience a home foreclosure, you typically have to wait about 5 years before you will qualify for a mortgage. If you file for bankruptcy with a foreclosure, you would qualify for another mortgage within 2 – 3 years. Filing for bankruptcy not only ensures that you don’t have future collections or judgments resulting from the mortgage deficiency debt, but it shortens the time period to have to wait to make another home purchase by 2 -3 years.
While bankruptcy is listed on your credit report for 7 – 10 years, it doesn’t interfere with your credit for that time period.