How does bankruptcy affect the home buying?
Bankruptcy can reduce or can eliminate your debts, but it damages your credit report and credit score. This affects your chances to obtain credit in the future for new credit cards, car loans and home mortgages.
You can buy a house after bankruptcy, but I will take financial planning and patience. You must check your credit report regularly to make sure that everything is there that should be. You can rebuild your credit history by using secured credit payments and installments and paying on time in due date.
If you want to buy a house after bankruptcy, here are a few steps that you need to know.
There are two types of bankruptcies; chapter 7 bankruptcies and chapter 13 bankruptcies.
Chapter 7 bankruptcy
Chapter 7 bankruptcy abolishes most of your unsecured debts like credit cards and medical bills, and you don’t need to pay back these debts. For qualifying chapter 7 bankruptcy, you have to meet some income requirements, and if you make good money, you can’t file chapter 7 bankruptcies.
How to buy the home after chapter 7 bankruptcy?
The good news is that this is possible to buy a house after filing chapter 7 bankruptcy. But you cannot buy immediately you have to wait at least two years. Obtaining a home loan is directly dependent on your credit history and financial records, therefore getting a favourable credit score is compulsory.
- If you have filed chapter 7, then you have to focus on doing the following:
- If you fall behind on payments after a successful chapter bankruptcy, this is the worst thing. If you are not paying your bills, car loans and mortgage on time, this is going to increase your two years waiting period to a longer duration.
- Once you have paid some of your debts now, you should show some financial flexibility, and you should save money for the down payment to buy home. The more money you will get better loan terms.
- Due to bankruptcy, your credit score is still tainted, but you can boost it by making payments on time and will have a positive impact on lenders.
Chapter 13 bankruptcy
Chapter 13 is a kind of consumer bankruptcy in which the debtor works upon a repayment plan with court and creditors to pay back in a set period.
Chapter 13, bankruptcy is considered a good option for many debtors. To file a chapter 13 bankruptcies, there are some requirements that need to be fulfilled
- Businesses can not file chapter 13 bankruptcies
- If your debts are too high, you are not eligible
- You must have updated tax fillings
How to buy the home after chapter 13 bankruptcy?
If you file chapter 13 bankruptcy, you can buy the home after completion of the repayment program. In chapter 13 bankruptcies, if you are paying your debts on time, it will improve your credit score, and you can buy a new home. Chapter 13 bankruptcy ensures that you are free of all unsecured debts at the completion of the program.
Bankruptcy Attorneys
Bankruptcy attorney assists you in examining the size and makeup of your debt, the assets you are going to save or lose during bankruptcy. An attorney can tell you that bankruptcy is going to be beneficial for you or not. An attorney will also represent you during court hearings and the meeting of creditors.