If I were to make a list of the questions I get during initial consultations with those considering bankruptcy at Halcomb Singler, whether it is possible to buy a house after bankruptcy would easily make the top 5. This is a very good question and one that needs a good answer before people can make an educated decision about whether to proceed with bankruptcy. This question is especially important to those who are planning to surrender their current home in a bankruptcy proceeding.
The answer to the question is yes. However, it is going to take time after one files a bankruptcy before a mortgage company is going to be willing to give a former debtor a mortgage. The best way to qualify for a home loan faster after bankruptcy is to pay all of your post-bankruptcy bills on time. I also remind debtors that the time that it will take after filing bankruptcy to qualify for a mortgage is an excellent time to save up a substantial down payment on their next home. A sizable down payment can help the former debtor avoid some of the financial pitfalls of home ownership such as ending up owing less on the house that it is actually worth.
How long it will typically take a debtor to obtain another home loan depends on what type of bankruptcy has been filed and whether a residence was surrendered in the bankruptcy. If a debtor files a Chapter 13 he or she may be able to qualify for the purchase of a home (with the permission of the Chapter 13 trustee) in as little as 1 year after the filing of the bankruptcy. Remember, this is the low end of the estimate and will not be possible if the debtor has fallen behind on his or her Chapter 13 payments to the trustee.
If the debtor filed a Chapter 7 and reaffirmed (kept and continued to make payments toward the mortgage) their home, then it may be possible for him to qualify for a mortgage as little as 2 years after the discharge of the Chapter 7 bankruptcy. On the other hand, if the Chapter 7 debtor surrendered his home in a Chapter 7 bankruptcy then it will likely be at least 3 years from the sheriff sale of the surrendered house before a mortgage loan can be obtained. Note that a sheriff sale is not the date of the discharge of the bankruptcy, but the end of the mortgage foreclosure case, which is often after the bankruptcy discharge.
Please keep in mind that the above-referenced waiting periods are only guidelines and they are certainly subject to change. In addition, these guidelines are not based on codified law. They are simply a rule of thumb. Just as every bankruptcy is different, so is every mortgage loan. For that reason I typically encourage debtors to meet with a mortgage broker to review their situation and give them advice on this issue that is specific to their situation.
Call me at Halcomb Singler if you live in Indianapolis, Carmel, Noblesville, Fishers, Zionsville or anywhere else in the greater Indianapolis area at 317-575-8222 or just click here. I will meet with you personally to review your financial situation, give my recommendation for or against bankruptcy and answer your questions about bankruptcy without a fee.
Halcomb Singler, LLP, is a debt relief agency. It helps people file for bankruptcy under the bankruptcy code. No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so. The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.
