Featured News 2013 Can You Buy a House While in Bankruptcy?

Can You Buy a House While in Bankruptcy?

If you have declared bankruptcy, you may be worried about how this decision will affect any transactions that you choose to make in the future. If you are planning on purchasing a home, then you may be wondering how to go about the process in the midst of a bankruptcy. Typically, you will not be able to purchase a home while you are in the process of a bankruptcy but you may be able to move into a new place of residence shortly after the bankruptcy is closed.

This is because there is typically a freeze on all major purchases during the bankruptcy process as an attorney helps you to organize your finances and determine how to cover all of your debts. Yet once you have exited bankruptcy, you may be able to start the process to purchase a new home. While banks may be more hesitant to grant you a mortgage, individuals do understand that you need a place to live and you may need a loan in order to purchase the home that you want.

In order to purchase a home post-bankruptcy, you should check your credit report of errors. The government recently discovered that one out of every four credit reports has some kind of error. This means that you may be misrepresented and this may cause you to have a difficult time obtaining the loan that you need. If you are going to apply for a home loan then you are going to want to seek a copy of your credit report and make sure that everything in the report is accurate. After you have determined that your credit score is accurate, you will need to slowly work hard to rebuild your credit.

Chances are that lenders won’t want to help you purchase a home because you have a bad credit history. Yet if you can prove them wrong and show evidence that you can repay your debts on time, then you may be able to get the money that you need. One of the best ways to rebuild your credit is to purchase a credit card that is secured by a deposit. This card will be called a secured credit card. If you use it and make the monthly payments when they are due, it can show that you are responsible and consistent with your money.

You can also prove that you have upstanding financial habits if you secure some type of installment loan that allows you to make monthly payments. This can be for a car, tuition, or a personal loan. By showing that you can pay the loan off consistently, you will be displaying good spending habits for your bank. After you have established a pattern of responsible financial choices, you should apply for a home mortgage. Most individuals will need 18 months to two years from the time that they were released by bankruptcy court in order to bring their credit up to where it was before they declared a bankruptcy.

The Federal Housing Administration will typically recognize your re-established credit score about 2 years after the bankruptcy discharge. You will have to prove that you are making payments which satisfy all state and federal taxes and that you have paid all judgments. You will also need to prove that 36 months have passed since the resolution of any foreclosures. It may be best for you to rent to own your home if you are not able to obtain a loan from the outset. This way, you will be able to move in and establish good spending habits which will impress the bank and make them more willing to lend to you in the future. If you want more information about purchasing a home after bankruptcy, talk to a local bankruptcy lawyer today to get the information that you need!

Related News:

Small Business Bankruptcy

If you are an owner of a small business, it is very likely that you face the pressures and stress of you company in full force, on a daily basis. Whether this is to create a product on time, or to ...
Read More »

‘Rich Dad, Poor Dad’ Author Files for Bankruptcy

Robert Kiyosaki wrote the bestselling book “Rich Dad, Poor Dad.” This financial self-help volume was read by thousands of dads who wanted to plan their money right. In addition to this ...
Read More »

Is Your Car Payment Unaffordable?

Many people think of bankruptcy as a way to avoid credit card debt or to save a house that is about to be foreclosed. Not often do people think of bankruptcy as a way to rescue a car. If you are ...
Read More »