Jeffrey M. Rosenblum, P.C.
  • Home
  • Firm
  • Attorney
  • Bankruptcy And Debt Relief
    • Bankruptcy Before Or After Divorce
    • Business Bankruptcy
    • Chapter 7 Bankruptcy
    • Filing Chapter 7 Chapter 13 Bankruptcy
    • Garnishments Liens Creditor Harassment
    • Lien Stripping
    • Loan Modifications
    • Saving Your Home
    • Short Sales
    • Medical Debt Relief
    • Taxes And Bankruptcy
    • What You Need To Know About Bankruptcy
    • Which Chapter Is Right For Me?
  • Tax Law
    • Business Commercial Tax Matters
    • Estate Planning, Probate & Tax Planning
    • IRS Tax Disputes
    • State Local Tax Disputes
    • Tax Audit Representation
  • Medical Malpractice And Personal Injury
  • Blog
  • Contact
Select Page

Financial life after bankruptcy not so bad

On behalf of Jeffrey M. Rosenblum, P.C. | Sep 28, 2012 | Chapter 7

The expected negative financial aftereffects of bankruptcy are often cited as a reason people delay in filing for bankruptcy protection. Many filers believe that the years following a bankruptcy will be credit-free, removing their ability to obtain loans for the seven- to 10-year period that a bankruptcy remains on a credit report. This belief is incorrect and, as many Long Island filers have discovered, financial life after bankruptcy isn’t necessarily all bad.

For many filers, mortgages can be obtained within years of a bankruptcy. Chapter 13 filers can receive Federal Housing Administration mortgages only one year after a bankruptcy is filed, while Chapter 7 filers can receive mortgages from the FHA after two years.

Even standard mortgages are obtainable with a bankruptcy still on a credit report, typically at two to four years after the bankruptcy is filed. The key to receiving a post-bankruptcy loan is in reestablishing credit as soon as possible by paying bills on time and by taking out a secured credit card where possible. The waiting period may even be shortened with the help of a hardship letter explaining any once-in-a-lifetime causes of the bankruptcy that would not affect the filer’s future financial management such as divorce or hefty medical bills.

Chapter 13 reorganizations are generally easier to recover from than Chapter 7 liquidation bankruptcies. This is because the filer is still paying back the debts incurred, albeit at a reduced rate. However, about 70 percent of bankruptcies are of the Chapter 7 variety, so most borrowers can expect a wait of several years after filing before being able to successfully secure a new mortgage.

A bankruptcy will typically reduce credit ratings by between 200 and 350 points and FICO credit scores by between 130 and 240 points. Using secured credit cards regularly, and paying them off early can raise scores steadily, allowing the filer to eventually obtain necessary loans.

Financial life after a bankruptcy can be difficult, but it’s not impossible to obtain credit when needed. The first year or two are the hardest, especially after a Chapter 7 filing, but with time and good financial habits, a bankrupt individual will be able to operate normally financially, without the burden of the debt load that caused the bankruptcy in the first place.

Source: The New York Times, “Life After Bankruptcy,” Vickie Elmer, Sept. 13, 2012

  • Facebook
  • Twitter
  • LinkedIn

Recent Posts

  • How to start a Chapter 11 bankruptcy case
  • How can bankruptcy help me protect my home?
  • What happens if I don’t pay my credit card bill?
  • Chapter 7 bankruptcy exemptions and how they protect filers
  • Misconceptions with a Chapter 11 bankruptcy filing

Archives

  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012

Categories

  • blog
  • Chapter 11
  • Chapter 13
  • Chapter 7
  • COVID-19
  • Debt Relief
  • Firm News
  • Foreclosure
  • IRS
  • Personal Bankruptcy
  • Tax Law
  • Uncategorized

RSS Feed

Subscribe To This Blog’s Feed

Want To Know About Your Options?

Office Locations

Great Neck Office
98 Cutter Mill Road
Suite 384N
Great Neck, NY 11021

Phone:  866-394-2661
Fax: 516-829-4734  * Not for legal service 

Map & Directions

Melville Office
445 Broadhollow Road
Suite 25
Melville, NY 11747

Phone:  866-394-2661

Map & Directions

Rockville Centre Office
371 Merrick Road
Suite 303
Rockville Centre, NY 11570

Phone:  866-394-2661
Fax: 516-536-2870 * Not for legal service 

Map & Directions

Brooklyn Office
8804 4th Avenue
Brooklyn, NY 11209

Phone:  866-394-2661

Map & Directions
Jeffrey M. Rosenblum P.C Expertise Badge

Armonk Office
80 Business Park Drive
Suite 207
Armonk, NY 10504

Phone:  866-394-2661
Fax: 914-603-8320 * Not for legal service 

Map & Directions

London Office
Carrington House
6 Hertford Street
London, UK W1J7RG

Phone: 07307155001

Map & Directions
  • Follow
  • Follow
Review Us

Attorney advertising 

© 2021 Jeffrey M. Rosenblum, P.C.. All Rights Reserved.

Disclaimer | Site Map | Privacy Policy | Business Development Solutions by FindLaw, part of Thomson Reuters