Daily Archives: September 1, 2016

How Soon After I File Bankruptcy Can I Buy A House?

How Soon After I File Bankruptcy Can I Buy A House? is

After Bankruptcy Buy House?
Maybe not this house

one of the most common questions I get.

Of course, there are different types of bankruptcy, Chapter 7 liquidation, or straight, bankruptcy, where you pay nothing to creditors.

And, Chapter 13, or payment plan, bankruptcy, where you pay something to creditors over 3 to 5 years.

(Unless, of course, you pay them off completely before 3 years)

After Chapter 13 Bankruptcy, When Can I Buy House?

What my bankruptcy clients really want to know is, when can I get a prime mortgage to buy a decent house?

During a Chapter 13 case, you cannot borrow money without the Court’s permission.  Which makes sense, because you have committed every dollar of your income to living expenses and your Chapter 13 plan payment.

So, after your Chapter 13 is completed, or, dismissed, you can buy whatever you want, and borrow whatever money anyone will lend you.  That is, there are no legal restrictions on what you do.

As a practical matter, prime mortgage lenders like to have 1 or 2 years post bankruptcy discharge before they consider you for a mortgage loan.

The law only says bankruptcy has to go off  your credit record after ten years.

Chapter 13 bankruptcy cases could be one year, or less, or, up to five years.  They are not all the same.

Either choice is going to send your score tumbling, but the fall won’t be as steep if you file for bankruptcy under Chapter 13 of the U.S. Bankruptcy Code rather than using Chapter 7.

(According to columnist David W. Myers)
Read more here: http://www.bellinghamherald.com/news/business/article98084452.html#storylink=cpy
He has quite a few errors in his less than one page column, so I am not vouching for the above.
Again, this is not a matter of law or statute, but, the policy of the mortgage lending industry.

After Chapter 7 Bankruptcy, When Can I Buy House?

bankruptcy buy house
Maybe not this one either

Chapter 7 bankruptcy usually lasts 4 to 5 months, until

the discharge is granted.

The bankruptcy discharge removes your personal liability for debts.  So, you are a better credit risk after you file chapter 7 bankruptcy, because you have less debt.

And, creditors know that you cannot file Chapter 7 bankruptcy again for 8 years.

However, you can never force anyone to lend you money.  There is no right to a mortgage, or, any other type of credit.

And your credit history is only one factor.  Did you keep paying any debts you had before filing bankruptcy, like, a car lease or loan?  What is your employment history?  What is the prime interest rate?

Some of these things are quite out of our control.

The thing about filing bankruptcy is, people do it when they cannot pay their debts.

And, if you cannot pay your debts, who is going to give you a mortgage?

 

 

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