Many people in the United States are able to quickly get their life back on track after bankruptcy, and you can too, as bankruptcy can give you the chance to start fresh financially. The effects after bankruptcy are, however, dependent on which type of bankruptcy you file under: Chapter 7 or Chapter 13. Some of these benefits and effects include being able to buy or rent a home or a car.
In order to buy, rent, or obtain a loan for a car after filing for bankruptcy, you will likely need to take care of your credit first. If you decide to buy a new or used car after bankruptcy, make sure not to pay more than you can afford. You should set a sensible budget limit for your monthly payments, and stay with it. Also, you should make sure to get your car payments in on time every month, as well as consider buying a used car first, before buying a new model, as this will be a more financially efficient decision, especially when you are trying to rebuild your credit.
If you want to buy, rent, or obtain a loan for a home after bankruptcy, you can. However, again, it may take work to rebuild your credit score first. One of the main factors that banks consider when they are determining whether or not to loan you money is your debt to income ratio. This is how much outstanding debt you have connected to the income that you have to support those debt payments. Lenders generally want you to make mortgage payments no larger than 30 percent of your gross monthly income. Usually after bankruptcy, with no outstanding debts relative to your income, you are able to come close to or meet that 30 percent mark. If this is the case, most mortgage lenders are willing to loan you money after 18 to 24 months, and you are able to own a home.