Filing for personal bankruptcy is sometimes the best option for someone who is dealing with high levels of personal debt. A bankruptcy filing temporarily stops collection activity. It can also lead to someone receiving a discharge of their unsecured debts.
Those with high levels of debt can move on with their lives and rework their budgets after bankruptcy. However, people often worry that filing for bankruptcy will prevent them from achieving their financial goals, such as home ownership. They may understandably wonder whether it’s possible to buy a house with a mortgage after filing for personal bankruptcy.
Yes, people can still qualify for home loans
Bankruptcy does have an immediate impact on someone’s creditworthiness. Lenders will close and freeze revolving lines of credit. After someone’s discharge, it could be at least a few years before they are eligible for a mortgage again. However, provided that people start rebuilding their credit after their discharge, some people qualify for a mortgage in as little as two years after a bankruptcy discharge. Those who are eager to obtain the best terms possible may want to wait a bit longer.
The official record of the discharge itself will come off of someone’s credit report 10 years after a Chapter 7 discharge or seven years after a Chapter 13 discharge. Rather than delaying bankruptcy and struggling financially for years, individuals may want to move forward with bankruptcy sooner so that they become eligible for a mortgage again sooner in the future.
Learning more about the impact bankruptcy has on one’s credit report can lead to more informed short-term and long-term financial decisions before, during and after bankruptcy.