Is it possible to purchase a home after going through bankruptcy? There is a short and long answer to this question. The short answer is ‘yes.’ The long answer includes the details surrounding that ‘yes.’ Once your bankruptcy case is over, there are no laws preventing you from purchasing a home. The most common forms of bankruptcy, Chapter 7 and Chapter 13, are different in how you can be eligible to own a home post bankruptcy. It is important to research what kind of loan options are out there and rebuild your credit in the time you must wait after bankruptcy.
The first thing that must happen is the bankruptcy must be discharged. No lender will work with you if you are in the process of filing for bankruptcy. Once you have the official discharge from the bankruptcy, it is advised that you wait at least 24 months so you have the opportunity to rebuild your credit.
The best way to rebuild your credit is to prove that you can be trusted to pay back money you owe. Two great ways to do this is through secured credit cards and installment loans. It is imperative that you pay your monthly payments on time. To build your credit, use only a small portion of your credit. Do not max out credit cards. When possible, pay back more than the monthly minimum. Stay at the same job for a good length of time. And remove any outstanding tax liens. Good debt-to-income ratio and consistent time at a job goes a long way in preparing to purchase a home after bankruptcy.
In addition to establishing good credit, there are some wait periods that exist with both Chapter 7 and Chapter 13 bankruptcy. These wait times also depend on the type of loan you are seeking for the home what caused your bankruptcy. You can qualify after one year of a Chapter 7 discharge AND one year after filing of Chapter 13. Chapter 13 is a payment plan of 5 years, so you can attempt to buy a home during the Chapter bankruptcy.
Khan Law has helped many people get financial relief through bankruptcy filings and is proud of our 100% discharge rate. If you have questions or concerns about your financial situation and need guidance, we invite you to schedule a complimentary initial consultation.