New changes to Bankruptcy as of Aug 1

Effective for applications dated on or after August 1, 2008: 

2-years elapsed time after discharge of bankruptcy and re-established credit since discharge of bankruptcy. 

4-years elapsed time after dismissal of bankruptcy and re-established credit since dismissal of bankruptcy. 

Extenuating circumstances: 2-years elapsed time after dismissal of bankruptcy and re-established credit after dismissal if resulted from extenuating circumstances . 

Borrowers with more than one bankruptcy in the past 7 years 

5-years elapsed time after most recent dismissal or discharge of bankruptcy and re-established credit since most recent dismissal or discharge of bankruptcy. 

Extenuating circumstances: 3-years elapsed time after most recent discharge or dismissal of bankruptcy and re-established credit after most recent discharge or dismissal if resulted from extenuating circumstances . 

Note: Most recent bankruptcy must have been the result of extenuating circumstances. 

If AUS is utilized, refer to findings and loan product description for seasoning requirements. 

FHA: 

At least 12 months satisfactory plan payments and court approval obtained. 

VA: 

Satisfactory completion of plan payments and borrower has re-established credit, OR 

At least 12 months of payment plan must have been made and trustee/bankruptcy judge approval obtained.

I know there are many things we have to watch in order to make life the best that we can.  We need to watch out for the unexpected that come along.

What to do to Avoid Bankruptcy

There is just no easy way to get out of debt, you have to face up to the consequences. A bankruptcy is not always the answer, as the effects are long lasting. There are four ways to handle debts that are out of control, listed in best to worst in regards to the effect it will have on your credit:

• If your credit isn't in terrible shape, can you reduce your other expenses, even if it means making hard choices or just changing your lifestyle to fit your income? Some ways to do this:

  a. Selling the second car

      b. Pulling equity out of your home

     c. Applying for a non secured signature loan 

      d. Obtaining a loan from a relative

     e. Selling your home and paying off your debts with the proceeds and then renting

     f.  Cashing out your 401K/retirement benefit

     g. Selling family heirlooms, jewelry, etc.

There is no magic solution. Don't believe anyone who tells you otherwise. If you need to file Bankruptcy it is not the end of the world. Lender use to forgive you very fast after a Bankruptcy but that is not the case any more Plan on take the time to payoff the chapter 13 or get through the Chapter 7. You need to re-establish your credit so you will be ready to take on a new mortgage.