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. Most Chapter 7 clients get new credit solicitations shortly after their discharge.
Clients are able to purchase a vehicle while in a Chapter 13 bankruptcy. We are simply required to file a motion with the court allowing you to incur additional debt and spelling out the terms of the new loan. Based on the flexibility of the Chapter 13 plan, we are able to make an adjustment to your budget to account for this new purchase.
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 6-7 years before you will qualify for a mortgage. If you file for bankruptcy with a foreclosure, you would qualify for another mortgage within 2 – 4 years, depending on the bank’s underwriting standards. 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 and average of 4 years.
While bankruptcy is listed on your credit report for 7 – 10 years, it doesn’t negatively affect or interfere with your credit for that time period.