This question comes up all the time. People who have trashed their credit scores worry about getting credit again. Here is how it works?
I helps if you start out by cleaning up your past wreckage. In other words, file for BANKRUPTCY get your discharge and move forward. For most of us – we don’t have the time it would take to pay off our credit cards or auto loan deficiencies. You can work your butt off and make minimum payments but you will never get ahead. Sometimes – you have to surrender to win.
Once you clean up or past or once you file your bankruptcy and benefit from the automatic stay – you will be amazed at how easy it will be for you to secure new credit. In most cases, it comes down to your ability to generate income. If you have a decent income and can present a budget that cash flows positive, people (and banks and credit unions) will extend you credit. They will loan you money because they no longer have to worry about a creditor getting a judgment and garnishing your wages.
Recently, I read a “prospecting” letter that a local lawyer sent out to people who were being sued by credit card companies. In his letter, this lawyer said that it is possible to get financed for a home loan within 2 years after your file for bankruptcy. To him I say: Bull Roar!
Banks aren’t lending money to anyone unless they have pristine credit and FICO scores of 750 or higher. Even then, they want to check your underwear, your socks and your tooth brush.
Smart people can “buy” a new house on a land contract or lease option during their bankruptcy. There is no 2 year magic window. Here in Mid Michigan, houses are commodities. If you see a house you like and it is for sale, go up and knock on the door. If it is listed with a broker, ask the homeowner when the listing agreement is scheduled to expire. Then: Sell yourself. Tell your story and tell the truth. For example: I went through a terrible divorce and had to file for bankruptcy. I am starting over, I have a good job and I have references that you can call and check out my story.
Somebody who has a house to sell wants to sell it. Get creative. Put together a deal where you buy the house “subject to” the mortgage on a land contract. The seller is happy because they unloaded their house and you are making the mortgage payments. You are happy because you just bought a house and if you buy it on land contract – you get to take advantage of the homestead exemption.
The same rule apply to buying a new car. If you have the income, the dealer is going to sell you a car. If you file bankruptcy, your credit score is going to go up – so you are going to get a better interest rate – not the best interest rate – but not “street” interest.
Bottom line: If you file for bankruptcy and have income, you will get credit again. The problem is – if you don’t file, your chances for getting new credit diminish by the day – sorry Susie Orman and Dave Ramsey – but you guys are flat out wrong. You spin your “holier than though” tales to sell books and other products. Their ethics are in the sewer; you continue to suffer and they fly around on private jets promoting their wares.
If you need more information, stop listening to the “spin doctors” or some newbie lawyer who has never done anything except go to school and act cool. Give us a call and get the straight scoop.
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