Can I Get a Mortgage After Filing for Bankruptcy?
If you are struggling with overwhelming debt, filing for bankruptcy can offer you a fresh financial start. Many people benefit from filing for bankruptcy every year. According to statistics, in 2023, there were 434,064 individual bankruptcy filings in the United States of America. This was a 16% increase compared to 2022. However, filing for bankruptcy can be a difficult and overwhelming process. Among the many concerns people have when considering bankruptcy is how it will impact their ability to get a mortgage. While bankruptcy can indeed affect your ability to obtain a mortgage, it does not necessarily mean that getting a house is impossible. However, the truth is that obtaining a mortgage after filing for bankruptcy will not be as easy as it would have been had you not filed for bankruptcy. Obtaining a mortgage after filing for bankruptcy requires patience and taking the right steps. Read on to learn more about getting a mortgage after filing for bankruptcy.
How to Obtain a Mortgage After Bankruptcy
Several post-bankruptcy issues need to be addressed before you can be able to obtain a mortgage. The following are the issues that must be addressed before you are able to be a homeowner after filing for bankruptcy;
Bankruptcy Discharge
The first step in qualifying for a mortgage after filing for bankruptcy is to have your bankruptcy case discharged. A bankruptcy discharge releases you (the debtor) from liability for qualifying debts at the end of the bankruptcy process. A discharge wipes out qualifying debts such that you are no longer legally required to repay them. After a bankruptcy discharge is granted, creditors cannot attempt to collect on the discharged debts. Lenders will want to see that your bankruptcy case was discharged.
Mandated Waiting Period
After your bankruptcy case is discharged, you need to be patient because of the waiting periods. Lenders enforce waiting periods for those hoping to apply for a mortgage after bankruptcy. If you filed for Chapter 7 bankruptcy, the waiting period may include three years for a USDA loan and four years for a conventional loan. If you filed Chapter 13 bankruptcy, waiting periods may include two years from the discharge date for a traditional loan and one year for a USDA loan. If you have had more than one bankruptcy filing in the past seven years, you may need to wait longer before you can be eligible for a home loan.
Rebuilding Your Credit Score
While bankruptcy can offer you a fresh financial start, it can damage your credit score and credit report. To qualify for a home loan, you need to show lenders that you can be trusted to repay your debts. There are several steps you can take to rebuild your credit after filing for bankruptcy, including the following;
- Check your credit report for errors that may be bringing your score down. Also, monitor your credit report to ensure your bankruptcy is removed from your report ASAP (after seven years for a Chapter 13 bankruptcy and after ten years for a Chapter 7).
- Create a budget
- Get a secured credit card
- Consider installment loans
- Become an authorized user
After you have rebuilt your credit score, take time to research the best mortgage loan available to fit your unique circumstances.
Contact a Lehighton & Carbon County Bankruptcy Attorney
If you are considering bankruptcy but have some concerns, contact our Lehighton & Carbon County bankruptcy attorneys at The Law Office of Adam R. Weaver. Esq., today to schedule a consultation.
Source:
uscourts.gov/news/2024/01/26/bankruptcy-filings-rise-168-percent
