Does your credit get hit twice with bankruptcy and foreclosure?

[needhelpinnj]

Hi Everyone!

I was just wondering, does your credit take a dive with both bankruptcy and foreclosure? I filed for Chapter 7 in January 2011 and was discharged in August 2011. My only reason for filing was because I bought a house in 2005 that I could not afford and the bank would not work with me. Anyway, I would like to buy a new townhouse but am wondering if my credit is going to get hurt twice.

I would love to hear any stories/insights about this situation.

Thank you!

P.S. My credit score is 703 now.

[kornellred]

The common understanding is that a debtor must wait a hard 24 months past a Chapter 7 discharge before a mortgage is obtainable, regardless of credit score. Things have changed quite a bit in the last couple of years, so this may no longer be true in 100 percent of cases.

[Over our heads]

If I'm reading right, you still own the TH, and you want to walk away instead of selling it? If that is the correct inference, then unless you can outright pay for another home, you won't be able to get a mortgage until 3 years have passed from the time your current property is out of your name. And yes, your CR will get hit again with a foreclosure. Even if you didn't reaff the mortgage in your BK, it is still in your name.

[doni49]

Did you reaffirm the mortgage in the BK7 process?

If not then you are not legally responsible for the loan. If that's the case, then you can walk away without any additional damage.

If yes, then that's why many people recommend AGAINST reaffirmation. You'd be responsible for the mortgage. If the foreclosure doesn't bring in enough money to pay off the debt, then you'll also be responsible for the remainder (a deficiency). YES -- this will bring down the score.