My fiance is considering filing for Chapter 7. He has okay/good credit, but more than $25,000 in credit card debt and his payments severely limit our finances. He does not have a car or house that creditors can seize for payment.
I’ve read that bankruptcy will stay on your credit for 10 years, but other people have told me that it will affect your credit for the rest of your life. If he files for bankruptcy, how will this affect our chances of buying a house or a car in the future years?
Do You Have a Question You'd Like Steve to Answer? Click Here.
Ironically if he files for bankruptcy you probably have a better chance of getting a house. I know that sounds crazy but bankruptcy will wipe out his debt. Once that is gone he can begin to save for a down payment. The larger the down payment, the easier it will to get a loan.
If his credit is bad now and he is behind in bills, filing bankruptcy will increase his score by about 150. Again, ironic isn’t it.
After the final bankruptcy discharge and start rebuilding his credit with a new credit card or two. He might have to get secured cards to do that. Not a big deal. That will begin to report new and good information about him which will bring his score back up.
We happen to be in a current economy where lending it tight but it will give you guys time to put all of this is place. I think if you follow this advice that you’ll be in a new home within 30 months.