One of the many bankruptcy-related misconceptions is that a person’s credit record is irreparably and completely damaged once he has filed for bankruptcy. That may not necessarily be true.
In fact, if you have filed for foreclosure in the past, you may not necessarily be automatically disqualified from another mortgage. Earlier rules held that a person who filed for a foreclosure or Chapter 7 bankruptcy would have to forget about obtaining any kind of other financing for the next 7 years. However, those rules, for the most part, have been relaxed a little. Now, the rule says that that you might have to wait for just about 3 years.
That doesn’t mean that you can simply walk away from a foreclosure and into a brand-new mortgage. There are a number of factors that must be considered before you can qualify for another mortgage. One of these factors is the reason why you lost your house to foreclosure in the first place. If your reasons are acceptable, you may not even have to wait very long to get another mortgage.
In fact, it is much easier to bounce back after bankruptcy or foreclosure, if your bankruptcy was the result of certain circumstances over which you have no control. For instance, if the bankruptcy was the result of a serious illness, or medical debt, it may not affect your credit score as badly because illness is something that you have little control over. Another acceptable reason for a foreclosure or bankruptcy could be the death of the main income earner in the family.