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Will it have any
effects on my credit? What can I do to minimize
the ill effects and have us get back on our feet?
In Love but Confused,
Female (32) San Francisco
Dear Confused:
I don’t suppose it’s any
consolation that you have a whole lot of company. In fact,
you live in an area where your predicament is rampant these
days. Please don’t tell me you plan to spend a fortune or
dive into debt with an expensive wedding bash! Put those
dollars toward your new home!
It’s important to know
what’s been going on during the time since your fiancé filed
his bankruptcy. I hope he’s made a conscientious effort to
re-build his credit by buying something on credit and making
timely payments. Starting out with a debit card backed by
cash in a bank account would do the trick. Financing an
inexpensive item like an appliance or a used car is another
way -- anything to begin creating a new credit rating. Late
payments or collections, or course are strictly a no-no.
Have him check out his
credit report, too! Make sure it’s accurate, and if it isn’t,
insist that the reporting agencies make corrections. Ask to
see for yourself. For a major purchase like a home, he’ll
need to be able to show a good reason for filing – not just
partying it up – and to show what changes have been made to
prevent out-of-control debt from playing havoc with your
future. TOP
His bankruptcy won’t have
an effect on your personal credit, but prior to the marriage,
you two should see an attorney about drawing up a pre-marital
agreement and learning which assets to keep titled as separate
property until you’re on firm financial ground and his
bankruptcy is behind you (at least 7 years).
The good news is
two
years is the magic number. Assuming your guy’s been behaving
himself money-wise since the bankruptcy, and that you have the
down payment and income to qualify for a mortgage, many
lenders will consider approving you for a home loan a couple
of years after filing for bankruptcy. But you may not like
the terms. Chances are, they’ll want to up the points or
charge higher interest because of his poor credit history.
You’re probably looking at a 20% to 25% down payment, too.
TOP
There are options, of
course. The first one you should consider is hiring a
mortgage broker you trust and spilling the beans. Tell all,
and let your broker make recommendations and place your loan
with a competitive lender. You can evaluate terms and pick
what’s affordable. If you can qualify on your own, that may
be a solution. You and new hubby can decide how to put him on
title later.
If I could send you a
shower gift, it would be the book: “Credit After Bankruptcy:
A Step-by-Step Action Plan to Quick and Lasting Recovery after
Personal Bankruptcy” by Stephen Snyder.
Over a million people in
the United States file for bankruptcy every year, but they
often get back on their feet in record time. To find out more
about the often devastating, sometimes positive effects
bankruptcy can have on your life, check out
www.nolo.com/lawcenter (the Debt & Bankruptcy link) and
www.bankruptcylawinstitute.com.
Good Fortune,
Nancy |
