Some people believe that once you file for bankruptcy you cannot get a home loan. This is a terrible misconception that prevents many people relief under the United States Bankruptcy Code. Filing a bankruptcy and receiving a discharge, whether Chapter 7 or Chapter 13, does not create a barrier to home ownership if the individuals are otherwise able to become credit worthy in the future.
Nothing prevents a bank from loaning money to a person who files for bankruptcy. Although the interest rate may be higher, the lender simply wants a guarantee that it will get paid on the loan over time. In most cases the guarantee comes from the federal housing administration (FHA), a government agency that insures home loans. In other cases, you may qualify on your own with a few more restrictions than other homeowners.
Under the FHA, you can obtain a home loan after a Chapter 7 bankruptcy if (1) more than 24 months have passed since your bankruptcy discharge; (2) you do not have outstanding tax liens with the Internal Revenue Service; and (3) at least 3 years have passed since any foreclosure or a deed-in-lieu of foreclosure has occurred.
A Chapter 13 debtor can apply for an FHA guaranteed home mortgage during the Chapter 13 bankruptcy process. Since you have a record of responsibility for your debts after bankruptcy, the FHA only requires a 12-month wait from the date you began making your payments. These payments must be on time and according to your bankruptcy plan. You must also have permission from the court allowing the new mortgage.
Numerous debtors are able to purchase a home after a bankruptcy discharge. In some cases, you can obtain a new home during bankruptcy. If you are currently struggling with overwhelming debts and hope to qualify for a mortgage in the future, please call my office to discuss your situation. At the Law Office of Michael P. O'Donnell we are here to help. Call me today at 817-732-7590 or 972-819-3861 or send me an E-mail to set up your free legal consultation. As an experienced and caring Fort Worth bankruptcy lawyer, I can help you with your debts and answer your questions about buying a home after filing bankruptcy.