If your mortgage was discharged in a chapter7, not reaffirmed, and goes into foreclosure - what is the effect on credit?

Your credit score may go down, but the effect of a foreclosure after a chapter 7 is usually quite minimal. By the time a person is pushed into a chapter 7 bankruptcy, their credit score is typically already low and the bankruptcy itself brings it down further. A foreclosure can only bring it down so much more. There are limitations as far as how frequently a person can file chapter 7, so afterwards, many credit companies will see you as a "good risk" and give you a line of credit. It's anybody's guess if you'll be able to buy another house in three years. A lot of that will depend on how much money you are able to put down on a purchase, income, whether there is another person that will be on the mortgage, their income and credit score, where the economy is headed three years from now, along with various other factors. If you want to repair your credit score as quickly as possible, there are credit repair companies that you could work with to that effect. Otherwise, for the most part, there are two main types of credit a consumer can have: revolving and installment. Revolving credit accounts are accounts like credit cards, where you have a set limit and can continue to borrow up to that amount. Installment accounts are where you borrow a set amount and then repay the amount over a course of several months/years. An example is school and car loans. Staying current on accounts covering both of these main areas typically helps improve your credit score. Some additional advice if your foreclosure just occurred, in case you are unaware: Minnesota has a six month redemption period for foreclosures by advertisement. Since you filed for chapter 7 bankruptcy, your lender most likely proceed with foreclosure by advertisement. In that case, you are allowed to remain in the property during the entire redemption period and you don't have to pay the lender anything. If you want to purchase another home relatively soon, you could try to use this time to save as much money as possible. If you're able to put enough money down, you'll be able to find a lender to provide you with a loan. Especially with a recent bankruptcy (and therefore no unsecured debts to be paying), you are in a great position to put some money away.

Your credit takes a hit as it would for a foreclosure outside of bankruptcy. However, given that you are already simultaneously taking a hit for filing bankruptcy, this does not appear to have an additional effect. After discharge we find that our clients are the recipient of offers for new credit cards and can obtain car loans.

Your credit score will decline.

All reporting on your credit report by the mortgage company should have stopped at the time of the filing of your Chapter 7. So in essence, the foreclosure should not showed on your report and therefore should have no effect on your credit score. How long you have to wait to buy another house is less about your bankruptcy and more about how long it take credit markets to recover in this economy. That is anyones guess.