One of the first questions clients ask is will a bankruptcy affect their ability to obtain or refinance mortgages afterwards. They are also concerned about how it affects their credit report and how they can improve their credit score post-bankruptcy. The answers to these questions depend upon the type of bankruptcy that was filed and whether debts were completely discharged, or whether a reorganization or a repayment plan were agreed upon.

That being said, the general answer to both questions is, “Yes,” the bankruptcy will affect a client’s ability to refinance an existing mortgage or obtain a new mortgage. The bankruptcy will also affect the client’s credit report with the three main credit reporting agencies and the client’s credit rating from each one. The bankruptcy will remain on a client’s credit report for tenyears, in most cases.

However, it may be possible to refinance or obtain a mortgage after about two years. A mortgage banker can explain the lender’s requirements for each type of product offered. Additionally, the underwriting requirements change often as does the legislation governing the home-mortgage industry. So, what may prevent a client from borrowing today, may not be an obstacle in a few months.

Remember, the primary purposes of the law are to give someone a fresh start by relieving the debt and repay the creditors if there are assets available to do so. Bankruptcy is a complicated, paper-intense, and emotionally draining procedure. Having an experienced lawyer to guide and represent a client through the process is a very wise idea.