What to know about getting a mortgage loan after your bankruptcy:

Securing a loan is one of the main questions people ask about after filing for bankruptcy. Getting a loan after you file bankruptcy can be a challenge.  But this doesn’t mean taking out a loan is impossible.  You can even get a mortgage loan after your bankruptcy. An experienced bankruptcy attorney can help you move forward quickly after bankruptcy.

So what should you know when you’re ready to apply for a mortgage after filing for bankruptcy?

  1. Types of Bankruptcy

Consider which type or chapter of bankruptcy you filed. Most people file for either Chapter 7 or Chapter 13. Chapter 7 bankruptcy includes the liquidation of your assets. Chapter 13 is a debt consolidation plan.  In either case, filing for bankruptcy is going to affect your mortgage application.

Time frame. If you filed for Chapter 7, you can expect the bankruptcy to remain on your credit report for 10 years. Chapter 13 bankruptcies remain on your credit report for up to seven years, but that doesn’t include the three- to five-year repayment period. The clock on your bankruptcy dropping off of your credit report begins ticking once the court discharges or dismissed your debts and your bankruptcy case is closed.

Do you wait to get a mortgage? In a perfect world you want to wait until your bankruptcy has fallen off of your credit report. But not everyone can wait 7 to 10 years to borrow money to purchase a home. Although your chances of approval will be lower and your down payment requirements higher, most people wait at least 12 to 24 months after bankruptcy to apply for a mortgage. But this also depends on the type of mortgage loan you’re dealing with. The wait for a government-backed loan is less than a conventional mortgage loan.  You can certainly qualify for a VA loan after bankruptcy, often in a shorter waiting period than you would with a conventional loan.

2. Example: VA loan waiting periods

The waiting period on getting a loan after your bankruptcy can vary depending on a host of factors, but a big one is the type of bankruptcy you experienced. With a Chapter 7 bankruptcy, lenders typically wait two years after the date of discharge. As for Chapter 13 bankruptcy, you may be eligible for a VA loan just 12 months removed from the filing date.

An experienced bankruptcy can help you quickly rebuild after your bankruptcy.  Attorney Douglas Barrett has authored the book- Life After Bankruptcy – to help rebuild quickly after bankruptcy.  The book is available currently on Amazon or in the office.

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