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Buying a House After Bankruptcy

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Can I Buy a House in Georgia After Bankruptcy? 

If you’ve filed for bankruptcy, you may be wondering whether you’ll be able to purchase a house for yourself and your family. While it may be challenging to buy a home after bankruptcy – it is possible. People who have a Chapter 7 or Chapter 13 bankruptcy on their credit report can still buy a home, as long as they meet certain conditions.

Buying a House After Bankruptcy: Wait Times

If you have filed for and been discharged from bankruptcy, most lenders will impose a waiting period before you can take out a mortgage. (A bankruptcy discharge is a judicial order from the bankruptcy court that releases a debtor from liability on certain debts; it also prohibits creditors from attempting to collect on discharged debts). The amount of time you have to wait after the bankruptcy discharge depends on the type of bankruptcy and the type of mortgage you’re applying for. The waiting period can range from one year to four or more years with the average running at two years.

The waiting periods may differ slightly, depending on the qualifying requirements. Government-backed loans are protected in case a borrower can’t repay their mortgage, which can encourage lenders to approve these loans more quickly. Conventional loans tend to be more strict and have longer waiting periods, especially if the borrower has filed for bankruptcy more than once.

Buying a House After Bankruptcy: Credit Score

If a person has gone through the bankruptcy process, lenders will look at the debtor’s financials more closely – including their bankruptcy discharge details and credit report. They want to make sure that the potential homebuyer can qualify for the loan and that they are financially able to pay back the loan on time. Once the waiting period to qualify for a loan is over, you’ll next have to meet a minimum credit score. The minimum score is tied to the type of home loan. (FHA loans typically have more lenient credit score requirements).

Chapter 7 and Chapter 13 bankruptcies will affect your credit in different ways. A Chapter 7 is when the court eliminates your unsecured debts as long as you can exempt all of your assets. With a Chapter 13 bankruptcy, the debtor can choose which assets they want to retain and their attorney will help them construct a repayment plan that will need to be “confirmed” by the court. Those who go through the bankruptcy process, may find their credit is more or less affected depending on what their credit score was before they filed.

Buying a House After Bankruptcy: Some Advice

If you are looking to purchase a home after your Chapter 7 or Chapter 13 bankrupty, there are some things you can do to make yourself more appealing to lenders. Debtors will usually need to wait two years before applying for a mortgage in order to be considered after bankruptcy.  We recommend that you take a look at your financial situation and assess how your assets, debts, and credit have changed.  You’ll want to better understand what your new expenses are and how to budget them. Second, start saving money for a down payment on a home. You’ll be better prepared for real estate fees and home maintenance — and the nest egg will show lenders that you’re serious about budgeting. Third, you should work on rebuilding your credit score by making your monthly payments on time, avoiding new personal loans or credit cards, and keeping your old accounts open (even if they’re paid off).

Have Additional Questions? Contact Burrow & Associates’ Bankruptcy Team

It can be a challenge to put your financial life back together after a bankruptcy. But with the right steps and a little bit of patience, you can qualify for a home loan after bankruptcy. If you have questions about buying a home in Georgia after bankruptcy, please reach out to our team of bankruptcy experts. We can help you determine the best course of action for you and your family. Call (678) 323-2394 or contact us online. We offer free initial consultations and have six convenient law office locations.

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