Getting a Home Mortgage Following Your Bankruptcy

I am fairly certain that I have never met a person who set their sights on filing for bankruptcy one day.  Filing for bankruptcy is a situation that no one ever plans on being in.  The sad reality is that in these difficult economic times, many families are left with no other option.

If you have found yourself in this situation, it is important that you not let yourself get too discouraged or feel like this is the end of the road for you.  It will be a difficult time, but as long as you don’t dwell on the negativity of the past you can recover.

One of the first things you should do is set some new goals.  One of these might be to own a home again.  If this is important to your family, you should understand that you CAN make it happen.  It is just going to take some time and a lot of hard work.

How long it is going to take depends on two major factors: what type of bankruptcy you filed and how hard you are willing to work at the credit restoration process.  You should understand that it is going to take some work.  Getting a bad credit home mortgage loan is not as easy as it once was.

If you filed Chapter 13, you may be able to get a mortgage before your bankruptcy is even over.  With your trustee’s approval, some people are able to qualify once they have made payments on time inside the bankruptcy for at least a year.

If you filed for a Chapter 7, it will take at least two years from your discharge date before you are eligible for loan approval.

In both cases, you will need to have reestablished credit that shows that you are willing to make payments on time.  Most underwriting guidelines require that you have at least four active accounts that have been paid on time.  For this reason, it is important that you focus on credit restoration immediately!

Is File Segregation the Answer for Your Credit?

You have probably seen flashy ads on the internet and in print promising that for a small fee you can legally obtain a brand new credit file.  The method of credit repair that people are advertising is called file segregation.  If you would like to learn more about it then you will want to read on.  We will be discussing what file segregation involved and explore whether it is the magic solution to credit restoration.

What does file segregation involve?

File segregation involves obtaining an EIN (Employer Identification Number) and starting a new credit file with this number.  You will typically be asked to use an address other than your own so that your new credit file and your old one do not become merged.

Is it the solution for credit repair?

If is sounds to good to be true, it usually is!  Unfortunately, there is no short cut to credit report repair. Employer Identification Numbers are legally obtained for the purposes of starting a legitimate business.  Obtaining a number for the purposes of credit repair is considered fraud.  The scheme requires that once you illegally obtain an EIN, that you then present this number as your social security number on credit applications.  This is bank fraud.  Take this a step further and if you submit any of these applications via mail, you can also be guilty of federal mail fraud.

The risk just is not worth it!

How do companies get away with this?

Well, obviously, legitimate and reputable companies don’t do this.  Those that advertise this service are typically fly by night companies that are layered in so many levels of legal protection that it would be difficult for most anyone to determine who actually owns the company.  Their goal is to collect an upfront fee from as many people as they can and move on.  They make a very big deal that their services are completely legal.  Typically, they have you do all the dirty work so that if you are found out, the only one on the hook for anything is you.