Bankruptcy, though a stressful process, can provide some benefits to the individual who is filing for bankruptcy protection. While no one wants to file for bankruptcy protection, doing so does provide the chance for someone to start over financially although there are credit score ramifications to be considered. Fortunately, for those in Wisconsin, there is hope of getting a mortgage again after filing for bankruptcy.
Why bankruptcy complicates matters
Chapter 7 and Chapter 13 are the most common types of bankruptcy filings, each of which carry with them a different standard for how debt is removed. Chapter 7, which is the most common type for people with limited financial means, involves a liquidation that results in most of the debt in question being repaid.
Chapter 13 involves a repayment plan that is created by the debt holder to his or her creditors. These repayment plans can, typically, take between three and five years to fully execute. Both types of bankruptcy have an impact on someone’s long-term credit as they can stay on their credit history for up to 10 years, making it difficult to get approved for a mortgage.
The timeframe for getting a mortgage
The good news concerning bankruptcy and mortgages is that having one on a credit report doesn’t preclude someone from applying for and receiving a mortgage. Chapter 7 Bankruptcy recipients can become eligible for a mortgage between two and four years after their paperwork is filed, depending on the type of loan they are seeking.
Attorneys who are well-versed in their state’s bankruptcy laws can help guide their clients through the process of filing for and receiving bankruptcy protection. This attorney can also work with their client to ensure that they can obtain a loan after the allotted time has passed to receive a mortgage.