Most people assume that filing bankruptcy ends any hope you have of a financial future. It affects the jobs you can have, the places you can live, and ultimately, what you can achieve in life. It is true bankruptcy does have a profound effect on your future, but it might not be as bad as some assume. As a matter of fact, for many, bankruptcy is the key to having a brighter financial future – One that might even include one day owning a home.
You Can Own a Home after Bankruptcy
It is a common misconception that you cannot buy a home after filing for bankruptcy. What people fail to realize is that bankruptcy is a process. It is not a black and white occurrence that eliminates all hope for a bright future. Bankruptcy does not end your chances of ever reaching your goals, even when those goals include owning your own home. Bankruptcy might make it more difficult to buy your own home, but if you carefully navigate the process of bankruptcy now, it can keep doors open for you in the future.
This is true even if your bankruptcy includes a current mortgage. Some people file to stop foreclosure proceedings. It is possible to keep your current home after filing for some types of bankruptcy and it is possible to buy a new home again in the future after filing.
Avoiding Bankruptcy Can Make Home Ownership Impossible
Unfortunately, some people choose not to file for bankruptcy because they assume it means it will eliminate any future opportunity to buy a home. This is not true. As a matter of fact, people who postpone bankruptcy often end up messing up their chances of owning a home more than someone who files at the right time. The important thing is not whether or not you ever filed for bankruptcy it is whether or not a bank deems you worthy of a loan when the time comes to apply. The further in the past your bankruptcy and the more you have done to clean up your financial status the better your chances of being granted a mortgage.
The bigger factor in whether or not a lender considers you a worthy candidate is your debt to income ratio. Most mortgage companies want to lend to people with debt to income ratio lower than 30%. When your debts equal less than 30% of what you make, you stand a fairly good chance of being granted a loan. Unfortunately, if you are teetering on the edge of bankruptcy, your debt to income ratio likely far surpasses that. And without filing you might not ever bring it to that point. Bankruptcy can help you get your debts under control and pay them down in a reasonable amount of time. Once your debt to income ratio is better, you are considered more qualified for a mortgage.
If you are in debt, but you are concerned bankruptcy will ruin your financial future, you need to explore your options a little more. We can help you determine if bankruptcy is the right choice for you and guide you toward a financial solution that makes it possible to achieve your dreams one day, including that of owning a home. Contact the Law Office of Brian R. Lewis today for more information.