Qualifying for a VA loan after bankruptcy is certainly possible, often in a shorter period than you would with a conventional loan. With a Chapter 7 bankruptcy, lenders typically wait two years after the date of discharge. As for Chapter 13 bankruptcy, you may be eligible for a VA loan just 12 months removed from the filing date. A previous bankruptcy can affect eligibility for some education loans but it does not affect eligibility for other forms of financial aid. The Bankruptcy Reform Act of (P.L. ) amended the US Bankruptcy Code at 11 USC (c) to prohibit denial of government student grants and loans based solely on the student's or borrower's. Jan 09, · I am 3 months post discharge and I am trying to re-establish credit after discharging my bankruptcy in July. I was able to get a $ Credit Builder Loan with Safe Credit Union. They do not have a minimum credit score requirement for this type of loan. There is a $30 acct set up fee and the loan is financed at a 5% interest rate.
Related videosGetting a VA Loan After Bankruptcy: What You Should Know
Perhaps the most well-known consequence of bankruptcy is the loss of property. As previously noted, both types of bankruptcy proceedings can require you to give up possessions for sale in order to repay creditors.
Under certain circumstances, bankruptcy can mean losing real estate, vehicles, jewelry, antique furnishings and other types of possessions. Your bankruptcy can also affect others financially. For example, if your parents co-signed an auto loan for you, they could still be held responsible for at least some of that debt if you file for bankruptcy.
Finally, bankruptcy damages your credit. Bankruptcies are considered negative information on your credit report, and can affect how future lenders view you. Seeing a bankruptcy on your credit file may prompt creditors to decline extending you credit or to offer you higher interest rates and less favorable terms if they do decide to give you credit.
Depending on the type of bankruptcy you file, the negative information can appear on your credit report for up to a decade. Discharged accounts will have their status updated to reflect that they've been discharged, and this information will also appear on your credit report. Negative information on a credit report is a factor that can harm your credit score. Bankruptcy information on your credit report may make it very difficult to get additional credit after the bankruptcy is discharged — at least until the information cycles off your credit report.
Lenders will be cautious about giving you additional credit, and they may ask you to accept a higher interest rate or less favorable terms in order to extend you credit. It will be important to begin rebuilding your credit right away, making sure you pay all your bills on time. You'll also want to be careful not to fall back into any negative habits that contributed to your debt problems in the first place.
Just as bankruptcy can hinder your ability to obtain unsecured credit, it can make it difficult to get a mortgage, as well. You may find lenders decline your mortgage application, and those that do accept it may offer you a much higher interest rate and fees. You may be asked to put up a much higher down payment or shoulder higher closing costs. Rather than give up your home and try to get a new mortgage after bankruptcy, it may be better to reaffirm your current mortgage during bankruptcy proceedings.
You would be able to keep your home, continue paying on your current mortgage — free of other debts — and stay in your current home. When you're struggling with unmanageable debt, bankruptcy is just one solution; there are others to consider. Most will also affect your credit, but probably not as badly as a bankruptcy — plus, these alternatives can allow you to keep your property, rather than having to liquidate it in bankruptcy proceedings.
Be aware that whenever you fail to honor the debt-repayment terms you originally agreed to, it can affect your credit. That said, bankruptcy will still have a more significant negative impact on your credit than will credit negotiation, credit counseling and debt consolidation.
Whenever you fail to repay a debt as you originally agreed to, it can negatively affect your credit. Some types of debt relief come with consequences that are more damaging and long-term than others. Before you make any decision about debt relief, such as declaring bankruptcy, it's important to research your options, get reliable advice from a qualified credit counselor, and understand the impact your choices can have on your overall financial well-being.
Regardless of what type of debt relief you choose, you can begin taking better care of your credit immediately by putting simple, responsible, credit-positive actions into practice such as:. Stay up-to-date with your latest credit information for free and learn what lenders might see when reviewing your credit.
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All rights reserved. Experian and the Experian trademarks used herein are trademarks or registered trademarks of Experian Information Solutions, Inc. Other product or company names mentioned herein are the property of their respective owners. Licenses and Disclosures. See what lenders might see when reviewing your credit. Advertiser Disclosure. Bankruptcy Basics Bankruptcy can be a complex process, and the average person probably isn't equipped to go through it alone.
Chapter 7 Bankruptcy Chapter 7 bankruptcy, also known as "straight bankruptcy," is what most people probably think of when they're considering filing for bankruptcy. Chapter 13 Bankruptcy Chapter 13 bankruptcy works slightly differently, allowing you to keep your property in exchange for partially or completely repaying your debt. Bankruptcy Terms to Know Throughout bankruptcy proceedings, you'll likely come across some legal terms particular to bankruptcy proceedings that you'll need to know.
Here are some of the most common and important ones: Bankruptcy trustee : This is the person or corporation, appointed by the bankruptcy court, to act on behalf of the creditors. He or she reviews the debtor's petition, liquidates property under Chapter 7 filings, and distributes the proceeds to creditors. In Chapter 13 filings, the trustee also oversees the debtor's repayment plan, receives payments from the debtor and disburses the money to creditors.
Credit counseling: Before you'll be allowed to file for bankruptcy, you'll need to meet either individually or in a group with a nonprofit budget and credit counseling agency. Once you've filed, you'll also be required to complete a course in personal financial management before the bankruptcy can be discharged. Under certain circumstances, both requirements could be waived.
Discharged bankruptcy : When bankruptcy proceedings are complete, the bankruptcy is considered "discharged. Under Chapter 13, it occurs when you've completed your repayment plan. Exempt property: Although both types of bankruptcy may require you to sell assets to help repay creditors, some types of property may be exempt from sale. State law determines what a debtor may be allowed to keep, but generally items like work tools, a personal vehicle or equity in a primary residence may be exempted.
Lien: A legal action that allows a creditor to take, hold and sell a debtor's real estate for security or repayment of a debt. Liquidation: The sale of a debtor's non-exempt property. The sale turns assets into a "liquid" form — cash — which is then disbursed to creditors. Means test: The Bankruptcy Code requires people who want to file Chapter 7 bankruptcy to demonstrate that they do not have the means to repay their debts.
The requirement is intended to curtail abuse of the bankruptcy code. The test takes into account information such as income, assets, expenses and unsecured debt. I am excited to be able to add this trade to my credit report that ends up being a savings account for me.
I'm hoping these accounts will start me on my Journey to good credit. Have a great Evening everyone. What some credit savy members do is get a secured loan e. Skip Navigation. Forum Topics. Sign In Help. Turn on suggestions. Auto-suggest helps you quickly narrow down your search results by suggesting possible matches as you type.
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