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Mortgage Glossary
Bankruptcy Mortgages
 
You might say that is impossible to get a mortgage after bankruptcy, but facts will prove you wrong and here we will explain what steps you should follow if you want a mortgage even if there is a bankruptcy recorded on your credit history.

Let us start with the basic question: what is bankruptcy? Filing for bankruptcy is an option that is usually considered when a debtor can't pay his debts in time. The Bankruptcy Procedure will clear you from all your debts, but you become subject to some restrictions. Since it has many negative effects, people try to avoid declaring bankruptcy. Here we will list only a few of the negative effects of bankruptcy. The biggest disadvantage is that you can lose your home and any other property you own, if the debt is as big as their common value. You can not act as a company director, be a member of the local authorities or the parliament so it really affects your career. Of course, your credit score will seriously drop after a bankruptcy, so it will be really hard to obtain credit in the future. These are only a few negative effects of bankruptcy, but there are many more. As a last one let us see one of the most unpleasant things: bankruptcy is publicly advertised. Although bankruptcy has many disadvantages, it has a few advantages too: it provides relative peace and the bankruptcy might be discharged after one year of the bankruptcy order. Bankruptcy has an advantage for the creditors too: they will get back a part (if not all) of the money lent. Fill out one of many Free online case evaluation bankruptcy forms to see if you even qualify for bankruptcy.
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Before you declare bankruptcy, you should think of an alternative. There are a few good alternatives to bankruptcy, which lack most of the negative effects of it. One of the best alternatives to bankruptcy is an IVA, or an Individual Voluntary Agreement. An IVA is a legally binding agreement between debtor and creditors. It helps you reduce your debts until an amount you can pay in your current financial situation. It is good both for the debtor and the creditors. The former manages to repay his debts without declaring bankruptcy and eventually losing his assets, and is good for the latter because he might get back a bigger part of the lent amount than in case of bankruptcy. Another good alternative is an informal arrangement made between debtor and creditors. It is more difficult than obtaining an IVA, but it is possible. Other alternatives are debt management plans; in this case agencies negotiate on your behalf to get your payments reduced, or an Administration Order, if your debt is less than £5.000. You can see that there are several good alternatives of bankruptcy, which lack the vast majority of its negative effects.

Now let us see if you can get another mortgage after a bankruptcy. Yes, it might be a little harder, because your credit score dropped and you credit history is quite bad, but it is possible. Here are the steps you have to make in order to obtain a new mortgage. Of course, you will have to wait until your bankruptcy is discharged, it usually takes a year, but it might take a shorter period if you ask for it. First, you should get a copy of your credit report; to know exactly what are you dealing with. Have all the derogatory credit items that were charged off in your bankruptcy removed from your credit report. You will see that this is quite a time consuming procedure, but you should wait patiently. If you do not want to do it yourself, you can contact a credit repair agency. Now you should get a credit card which should be reported to all your credit bureaus. The next steps depend entirely on you: in order to avoid any unpleasant situations in the future you should pay all your bills in time, you should have a strong documented rental history, and this document will be asked if you want a mortgage! One of the most important things is not to spend too much! Do not buy a car or go on a luxurious holiday, because you should have some spare money if you really want a new mortgage. So be strong and resist any temptations! If you do all this, you have really good chances to obtain a mortgage, even if you had a bankruptcy in the past.

So you can see that it is possible, you can get back on track even after a bankruptcy. Although it might seem as a good choice at the time, you should try to avoid declaring bankruptcy, because it will make your life a little harder if you want a new mortgage. If you can, try to avoid, but it is not the end of the world if you can not. All it takes is to plan ahead, and in a year you can go for another mortgage. So try to avoid any temptations and do not spend all your money at once, this way you will sooner or later be eligible for a mortgage.