Bankruptcy: No more past due bills. Now I’m ready to Buy a House
That may be true and it may not be true. Before I tell you why, let’s briefly discuss the 2 types of bankruptcies an individual usually file, chapter 7 or chapter 13.
A chapter 7 bankruptcy is a process of liquidation that will discharge both personal and/or business debts when they cannot be paid. This will give an individual a "fresh start" with no liability for any of the debts that weredischarged. However, a discharge is only available to individual debtors (also sole proprietorship), not to partnerships or corporations.
A chapter 13 bankruptcy is a process in which an individual participates in the reorganization of his or her debts. Basically, the debtor will make payments to the bankruptcy court that will make payments to the debtor’s creditors. The debtor has between 3 to 5 years to complete their repayment plan and will receive a discharge upon completion of all payments.
Bankruptcy: No more past due bills. Now I’m ready to buy a house. Maybe and maybe not. Yes and no. It’s depends on where you’re at in the bankruptcy process, how much seasoning you have and your credit.
Where are you in the bankruptcy process. If your debts have not been discharged or if you have not completed your reorganization payment plan, then you won’t be able to purchase a home. However on the day you’re discharged of your debts or on the day you’ve completed your reorganization payment plan, you could buy a home. Bankruptcy: No more past due bills. Now I’m ready to buy a house, but it won’t be cheap. It’ll take cash or a hard money loan with a large down payment.
However the best way to buy a home after bankruptcy is to reestablish credit as soon as possible. You could apply for a Secured Credit Card or a Savings Secured Loan as long as they report your payment history to the credit bureaus. Also make sure you pay each debt is paid as agreed or in a timely manner. This will increase your FICO score and put you in a position to possibly purchase a home one year after bankruptcy. Yes one year after bankruptcy. As long as you qualify financially and meet the lender’s underwriting guidelines, you have a chance of buying home. So Bankruptcy: No more past due bills. Now I’m ready to buy a house. Yes you are and Yes you can.