CBS News
6 tips for getting a home equity loan after bankruptcy
Getty Images
Filing for bankruptcy can be a challenging and overwhelming period in your financial journey. But while the bankruptcy process can be tough, and can result in serious financial hurdles, it’s also a relatively common option to choose. For example, annual bankruptcy filings totaled 452,990 in 2023, according to a report from the Administrative Office of the U.S. Courts — an increase of nearly 17% compared to 2022, when 387,721 bankruptcy cases were filed.
Given the current challenges posed by today’s economic environment, the increase in bankruptcy filings year-over-year makes sense. For starters, persistent inflation issues have led to higher prices on consumer goods, causing budgets to be stretched thin. And, the current high-rate environment has led to hefty borrowing costs across the board, putting even more strain on many people’s finances.
But if you’ve filed for bankruptcy recently — or are planning to — it’s important to understand that bankruptcy does not have to be a dead end. In fact, it can be a starting point for rebuilding your financial health, and if you’re a homeowner, obtaining a home equity loan may be a crucial step in that process. That said, it won’t be an easy path to securing a home equity loan after bankruptcy, but the below tips can help.
Compare your home equity loan options online here.
6 tips for getting a home equity loan after bankruptcy
Getting a home equity loan after a bankruptcy can be difficult but there are ways you can improve your chances of approval. Specifically, borrowers will want to:
Understand the timing
Bankruptcy can stay on your credit report for anywhere from seven to 10 years, depending on the type of bankruptcy filed. While this might seem discouraging, it’s crucial to recognize that lenders typically become more willing to work with you as time passes.
As the bankruptcy filing moves further into the past, lenders may view your financial situation more favorably, upping your chances of getting approved for a home equity loan. So rather than applying right after a bankruptcy filing, be patient and proactive about your credit during that time instead.
Learn more about the home equity loan rates you could qualify for here.
Rebuild your credit
After bankruptcy, rebuilding your credit should become a top priority. Start by obtaining a copy of your credit report to ensure accuracy. Then, focus on paying bills on time, reducing outstanding debts and gradually improving your credit score.
Establishing a positive payment history will demonstrate to lenders that you are committed to financial responsibility. You can also consider using secured credit cards or becoming an authorized user on a friend or family member’s credit card to add positive information to your credit report.
Shop around for lenders
Not all home equity lenders will have the same criteria or policies regarding post-bankruptcy lending — the same way that not all lenders offer the same types of loans, terms or rates. So, if you’re looking for a home equity loan after bankruptcy, it can benefit you to take the time to research and shop around for lenders who specialize in working with borrowers who have experienced financial setbacks.
For example, while traditional banks may have stricter requirements, there are financial institutions and online home equity lenders that may be more flexible in their evaluation process. As you conduct your search, be sure to compare interest rates, terms and fees to find the most favorable option for your circumstances.
Consider a co-signer
A co-signer with a strong credit history can significantly enhance your chances of securing a home equity loan after bankruptcy. When you add a co-signer to a loan, they’re essentially vouching for your ability to repay the loan, giving lenders added assurance — which can be vital after a bankruptcy.
However, it’s important to recognize that the co-signer you use is equally responsible for the loan, and any default could negatively impact their credit, so be sure that you have the ability to repay the loan before adding another party to the obligation. Open communication and trust are key when involving a co-signer in the loan application process.
Highlight positive financial changes
When applying for a home equity loan after a bankruptcy, it can help to be prepared and provide evidence of positive financial changes you’ve made in the time since. This could include stable employment, increased income or successful management of other debts. Demonstrating responsible financial behavior and a commitment to improving your financial standing will make a positive impression on lenders. That, in turn, can enhance your chances of being approved for a loan.
Seek professional guidance
Navigating the complexities of obtaining a home equity loan after bankruptcy can be challenging, so seeking professional guidance can be a wise move in some circumstances. For example, it may help to consult with a financial advisor or mortgage broker who specializes in post-bankruptcy financing. They can provide personalized advice based on your specific situation, help you understand the requirements of different lenders and guide you through the application process.
The bottom line
Securing a home equity loan after bankruptcy is undoubtedly a challenging task, but it’s not impossible. By understanding the timing, actively rebuilding your credit, shopping around for lenders, considering a co-signer, highlighting positive financial changes and seeking professional guidance when you need it you can increase your chances of obtaining a home equity loan that works for you. The process won’t be easy, though, so patience and persistence are key elements in your journey toward financial recovery.
Tropical Storm Sara made landfall in Belize on Sunday as forecasters expect heavy rain to cause life-threatening flash flooding and mudslides.
The storm made landfall near Dangriga, about 55 miles southeast of the capital Belmopan, the Miami-based National Hurricane Center said.
This comes after Sara drenched the northern coast of Honduras, where it stalled since Friday, swelling rivers and trapping people at home.
Moises Castillo / AP
One death was reported Saturday morning by Honduras Emergency Management, who also said that there have been at least 90 rescues and over 47,000 people affected by the storm.
The Hurricane Center’s tropical storm warning as of Sunday included Honduras’ Bay Islands as well as the country’s northern coast from Punta Castilla to its border with Guatemala; the Caribbean coast of Guatemala; Belize’s coast and northward into the coast of Mexico’s state of Quintana Roo, from Chetumal to Puerto Costa Maya.
The storm, which is moving at 6 mph, will continue to move inland over the Yucatan Peninsula and could drop up to 10 inches of rain across the area, with localized totals reaching 15 inches, through early next week. The conditions “will result in areas of flash flooding, perhaps significant, along with the potential of mudslides,” according to the Hurricane Center.
NOAA/National Hurricane Center
“A storm surge could raise water levels by as much as 1 to 3 feet above ground level near and to the north of where the center of Sara crosses the coast of Belize,” the center said Sunday. “Near the coast, the surge will be accompanied by large and destructive waves.”
Sara is the 18th named storm of the 2024 Atlantic Hurricane Season, which officially runs from June 1 until Nov. 30, with activity typically peaking between mid-August and mid-October. An average season brings 14 named storms, seven hurricanes, and three major hurricanes, according to the National Oceanic and Atmospheric Administration, which did predict the 2024 season would produce “above average” numbers.
A gold pocket watch given to the ship captain who rescued 700 survivors from the Titanic sold at auction for nearly $2 million, setting a record for memorabilia from the ship wreck.
The 18-carat Tiffany & Co. watch was given by three women survivors to Capt. Arthur Rostron for diverting his passenger ship, the RMS Carpathia, to save them and others after the Titanic struck an iceberg and sank in the north Atlantic on its maiden voyage in 1912.
Andrew Aldridge/Henry Aldridge and Son via AP
Auctioneers Henry Aldridge and Son, who sold the watch to a private collector in the United States on Saturday for 1.56 million British pounds, said it’s the most paid-for piece of Titanic memorabilia. The price includes taxes and fees paid by the buyer.
The watch was given to Rostron by the widow of John Jacob Astor, the richest man to die in the disaster and the widows of two other wealthy businessmen who went down with the ship.
Astor’s pocket watch, which was on his body when it was recovered seven days after the ship sank, had previously set the record for the highest price paid for a Titanic keepsake, fetching nearly $1.5 million (1.17 million pounds) from the same auction house in April.
Auctioneer Andrew Aldridge said the fact that Titanic memorabilia has set two records this year demonstrates the enduring fascination with the story and the value of the dwindling supply and high demand for ship artifacts.
“Every man, woman and child had a story to tell, and those stories are told over a century later through the memorabilia,” he said.
Rostron was hailed a hero for his actions the night the Titanic sank and his crew was recognized for their bravery.
Andrew Aldridge/Henry Aldridge and Son via AP
The Carpathia was sailing from New York to the Mediterranean Sea when a radio operator heard a distress call from the Titanic in the early hours of April 15, 1912 and woke Rostron in his cabin. He turned his boat around and headed at full steam toward the doomed vessel, navigating through icebergs to get there.
By the time the Carpathia arrived, the Titanic had sunk and 1,500 people perished. But the crew located 20 lifeboats and rescued more than 700 passengers and took them back to New York.
Rostron was awarded the U.S. Congressional Gold Medal by President William Howard Taft and was later knighted by King George V.
Madeleine Astor, who had been helped into a lifeboat by her husband, presented the watch to Rostron at a luncheon at her mansion on Fifth Avenue in New York.
The inscription says it was given “with the heartfelt gratitude and appreciation of three survivors.” It lists Mrs. John B. Thayer and Mrs. George D. Widener alongside Astor’s married name.
“It was presented principally in gratitude for Rostron’s bravery in saving those lives,” Aldridge said. “Without Mr. Rostron, those 700 people wouldn’t have made it.”
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
