Can You Get Approved For A Home Loan After Filing Bankruptcy?

Life isn’t an easy journey and will often come with a whole host of trials and tribulations, it just depends on the decisions we make and which direction we turn. Every decision we make will have an effect on our lives so it’s important to think them through. When it comes to big money decisions, there is no easy way of reaching a conclusion without some serious thinking, but what if you’ve already made some bad decisions previously in your life and it’s affecting your judgment?

Filing for bankruptcy is no bad thing and more often than not is the best choice to help an individual escape financial turmoil. But can you be approved for a mortgage after filing for bankruptcy?

How Soon Until I Can Apply?

This is an open question and it very much depends on your situation. It’s worth remembering that credit will be available to the majority of people that have filed for bankruptcy. Depending on which type of bankruptcy you have filed will have a direct effect on when you can apply again, these are chapter 7, chapter 11, and chapter 13.

One thing you can do until that time is to try and work on your credit rating in other ways, keep an eye on it using one of the free apps now available to the public.

Chapter 7

When it comes to a chapter 7 bankruptcy, there is one main way of paying off all your credit card debts, personal loans, medical bills, and any other type of debt you may have. Selling your possessions. It’s not a nice way of going about things, but it’s a popular choice for many.

This form of bankruptcy will stay on your credit report for up to 10 years, but despite this, you still might be able to get a mortgage. The following few years will be essential if you want to buy a home using a mortgage scheme. You’ll need to rebuild your credit rating as much as you can, save enough money for a substantial down payment and make sure you wait until enough time has passed in order to apply.

Chapter 11

Chapter 11 is not typically a form of bankruptcy used by individuals, more so by businesses. However, it is possible for an individual to file for Chapter 11 if they make too much money to qualify for Chapter 7 or have more debt than is allowed for Chapter 13.

This form of bankruptcy is known as reorganization and is a process in which a business or individual will reorganize their business affairs, debts, and assets. This is usually filed for when people need some time to get things in order and restructure any debts they have.

If you wait long enough after filing for Chapter 11 then you should be eligible for a mortgage.

Chapter 13

Chapter 13 is the time giving bankruptcy process that gives you a chance to repay either some or all of your debts during a repayment period lasting usually 3-5 years. At the end of your repayment period, the rest of your debt will be discharged.

This is known as the wage earner’s plan as it allows individuals with a regular income to pay off what they owe. It can stay on your credit report for up to 7 years, but this doesn’t mean you won’t be able to apply for a mortgage again. Instead, you’ll need to get permission from your bankruptcy trustee.

What Loans Should I Look At?

The financial industry can be a minefield after filing for bankruptcy and with the number of loans available it’s difficult to know which one is going to be best for you. At this stage, it’s important to remember that you need to consider every option available to you and be 100% sure that this loan is the best thing for you.

Conventional Loans

When we talk about conventional loans, we look at private companies that offer money, but are not insured by government agencies. These forms of loans have much stricter requirements and will often need to take out private mortgage insurance, not only that, but your credit rating must be back up to a very decent level, something that isn’t easy after bankruptcy. You can apply for these though for both chapters 7 and 11 you’ll have to wait a minimum of 4 years and chapter 13 requires you to wait 2 years.

Government Loans

There are a few different loans that are offered by government agencies for you to consider so make sure you contact a few of these agencies before making your decision. It might work out in your favor borrowing from somewhere with insurance.

Filing for bankruptcy is a stressful and anxiety-inducing process that will leave a mark for some years to come. The best thing you can do is to try and stay positive and take some positive steps in order to come out the other side stronger. Keep your head high, and before you know it, you’ll be back on the property ladder.

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