When Can I Buy A House After Bankruptcy?
A very common question we get asked is “how long after bankruptcy can I buy a house?” Clients are often surprised to learn that the wait is not too long. In fact, if you experienced a foreclosure, a bankruptcy filing may speed up the timeline to purchase a new home. How does a bankruptcy help with a previous foreclosure? It demonstrates to a potential new lender that you have resolved all prior debt issues and there will be no more collection efforts left over from the previous home. Without a bankruptcy to clear the debt, the wait to purchase a new home would otherwise be more like 6 -7 years after a foreclosure.
Below we provide a timeline and the factors that affect your credit and ability to make future purchases, such as a new home. We also offer free consultations to discuss your unique circumstances and questions. Call us today at 866-261-8282 to speak with a licensed attorney.
Buying a Home In or After a Chapter 13 Bankruptcy:
If you file a Chapter 13 bankruptcy, you will typically be eligible to purchase a home within 2 – 4 years after completion of the re-payment program, depending on each bank's lending standards.
A common misperception is that filing a bankruptcy will destroy your credit. In reality, filing a Chapter 13 bankruptcy actually helps improve credit over the course of the program and will therefore position you to successfully purchase a new home. A bankruptcy will assist you by:
- Reducing and potentially eliminating debt that could affect your mortgage underwriting qualifying ratios.
- Providing your potential lender with a proven payment track record through the Chapter 13 plan.
- Ensuring that you are free of all unsecured debts at the completion of the program. Your new lender doesn’t have to worry about old debt popping up or a wage garnishment taking funds that render you unable to pay your new mortgage…neither do you.
We help our clients through this process by providing a list of mortgage lenders who provide fair rates and have a good understanding of the Chapter 13 process. We can also provide a potential lender with your Chapter 13 payment history that they use as a credit qualifier.
Call us today at 866-261-8282 to find out more about benefits of filing a Chapter 13 debt consolidation program.
How Long After a Chapter 7 Bankruptcy Can I Buy A House?
A Chapter 7 bankruptcy is a debt elimination program designed to help eliminate unsecured debts that you can no longer afford to pay. Rebuilding your credit after a Chapter 7 discharge requires managing credit wisely and establishing a positive payment history for all of your bills.
Typically, you will qualify for a new home purchase within 2 years of a Chapter 7 court discharge, depending on each bank's lending standards. Other factors include how you have managed your credit since the discharge and your income at the time of the loan application.
Discuss Your Options with a Licensed Professional
We offer free consultations for people to explore their debt resolution options and ensure that they will be able to reach their long-term goals, such as home ownership. We will carefully review your current circumstances and consider your future financial goals before making an informed recommendation.
Call us today at 866-261-8282 to speak to an attorney over the phone or set up an in-office appointment at any of our six Michigan law offices in: Detroit, Ann Arbor, Warren, Southfield, Dearborn and Flint.