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Plan your post-bankruptcy financial future

Many consumers who are struggling with debt hesitate to file for bankruptcy because they dread tanking their credit rating and not being able to buy a home, a new car or even open a credit card account in the future.

It's a reality that needs to be weighed carefully, but consumers should realize that filing a Chapter 7 bankruptcy does not preclude them from ever qualifying for credit again.

In most cases, bankruptcies negatively impact credit ratings for a decade. But this doesn't mean that you will have to wait that long to buy a home.

Federal Housing Administration-backed mortgage loans like Freddie Mac or Fannie Mae only require a consumer to wait a mandatory period — usually two to four years — after filing for bankruptcy to qualify for a loan.

But most mortgage loans requite that the consumer has a of at least 620 to qualify for a mortgage. It can take a little while for a consumer's score to bounce back up that high after a bankruptcy, which is why it's important to hit the ground running and boost it quickly.

This can be done by judiciously applying for credit from companies that are willing to take a chance on those with iffy credit and scrupulously making all payments on time. Either pay off your debt liability or pay well over the minimum amounts if you want your score to rise. Otherwise, your debt-to-credit ratio can be far to high to qualify for a mortgage.

The bottom line is that while it may be difficult to re-establish credit at first, it is possible, and if you are in dire financial straits right now, your credit profile is probably already a mess. It's far better to tackle it head-on and resolve it through bankruptcy and then get a fresh start than it is to dither about your debt problems while the bills mount.

Source: Credit Solution Program, "How Lenders View You After Bankruptcy," John Ulzheimer, accessed Dec. 02, 2016

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At the law offices of William H. Oliver, Jr. & Associates in Toms River and Lakewood, New Jersey, we represent clients in Toms River, Neptune, Trenton, Middletown, Red Bank, Wall, Lakewood, Lakehurst, Manchester, Asbury Park, Old Bridge, Jamesburg, Barnegat, Forked River, Manahawkin, Ocean Township, Brick, Manasquan, Howell, Freehold, Hazlet, Bradley Beach, Brown Mills, Long Branch, Keansburg, Marlboro, Bayville, Beachwood, Whiting, Sayreville, South River, East Brunswick, Monmouth County, Ocean County, Middlesex County, Burlington County and Mercer County.