There's a common myth that filing for bankruptcy prevents consumers from qualifying for loans and credit in future. In fact, bankruptcy may be more likely to help your chances than to hurt them.
Many Americans looking to take advantage of today's low mortgage rates are learning that, not only can they not qualify for their desired rate, but they can't qualify for a mortgage at all.
According to the Chicago Tribune, as many as 25 percent of loan applicants - many with good credit scores - are being turned down by lenders. Over the last few years, the average credit score has actually risen to 760 from 720. Consumers are being more careful, yet we're being offered fewer opportunities.
Experts say the reduction in borrowers could have a harmful snowball effect on the economy. As fewer people are able to buy homes, demand will decrease and home prices will continue dropping.
If you've been hesitant to consider bankruptcy because you think it could limit your opportunities, consider this your wakeup call. Opportunities are already limited; bankruptcy can help.
Chicago bankruptcy lawyers have seen many clients wait to seek help until their credit card balance is sky-high and their credit score has hit rock bottom. But the farther you allow yourself to fall, the steeper the climb back up.
For many people with unmanageable mortgage payments, credit card bills, or medical debt, bankruptcy can be a way to stop the financial bleeding before it gets worse - so you can be in a better position to grasp economic opportunities when they do inevitably arise.
Contrary to popular belief, it is possible to qualify for loans and credit cards after a Chicago bankruptcy filing - sometimes in just a few months. Yes, a bankruptcy filing will be noted on your credit report for several years after filing. However, so will everything else that you accomplish during that time.
If Chicago bankruptcy is what it takes to eliminate debt and get back on track, the rewards of filing probably outweigh the risks.
For consumers who already have a mortgage but are struggling to make payments or qualify for a refinance, Chapter 13 bankruptcy can provide the legal power to stop foreclosure and regain financial control.
The lending market looks like it may get worse before it gets better, according to the Chicago Tribune article. New regulations intended to minimize the kind of risky lending that led to the mortgage crisis could require buyers to cough up down payments of at least 20 percent, essentially pricing all but the wealthy out of the housing market.
For many consumers, this may be the time to hunker down and rebuild credit. Bankruptcy can provide a way.
More Blog Entries:
American Dream of Home Ownership a Challenge in Chicago: June 25, 2011
Prices Are Low! Mortgages Are Cheap! But You Can't Get One, Chicago Tribune