Buying a house is a big goal for many people. But after filing for bankruptcy, people feel like their home ownership dreams have been shattered.
But is it true that you can’t buy a house after bankruptcy?
You’ll be surprised that while bankruptcy does complicate some matters, you can still achieve your dream of owning a house.
Read on to learn more.
How Long After Bankruptcy Can I Buy a House?
First, let us confirm that you can buy a house after filing for Chapter 7 or 13 bankruptcy in Kentucky. What varies is the waiting period depending on the type of bankruptcy you filed for, and the work you’ve put in to avoid new debt and to restore your credit score.
And because rebuilding credit is a crucial step towards buying a house, we’ll share a few ways you can improve your credit score:
- Pay your bills in full and on time
- Apply for a secured credit card or credit-builder loan
- Monitor your credit report regularly to check for any errors or discrepancies
Some of the best options to obtain a loan for a house after bankruptcy are government-backed loans and conventional loans. And depending on the type of bankruptcy you file for different timelines apply.
Buying a House After Chapter 7 Bankruptcy
In a Chapter 7 bankruptcy, you liquidate your non-exempt assets to pay off the creditors. This process may help to clear the debts and give you a fresh start, but it remains on your credit record for 10 years, severely damaging your credit score.
Here are the waiting periods for various loans:
- FHA loans — you can apply for the loans two years after the discharge of your bankruptcy declaration.
- VA loans — you’ll have to wait two years after the discharge or dismissal to apply for the loan.
- USDA loans — you’ll have to wait three years after the discharge to apply for this loan.
- Conventional loans — these loans have a longer waiting period. You’ll have to wait four years from the date you filed for bankruptcy.
Buying a House After A Chapter 13 Bankruptcy
For a Chapter 13 bankruptcy, you agree to restructure your debt by making scheduled payments to creditors. It not only allows you to keep your assets but also shields your credit score from significant damage. It remains on your credit record for seven years.
Here are the waiting periods for each loan facility:
- FHA loans — the waiting period is one year after the dismissal.
- VA loans — there is no waiting period to apply for this loan but you may have to show 12-month on-time payments for approval.
- USDA loans — the waiting period is one year from the filing date.
- Conventional loans — you’re required to wait for four years after dismissal or a two-year waiting period if the court discharges your bankruptcy.
Hire the Best Bankruptcy Attorney in Kentucky
If you’re considering buying a house after filing for bankruptcy, contact the best bankruptcy attorney in Kentucky, W. Ron Adams. For over 33 years, the law office of W. Ron Adams has helped thousands of people successfully navigate their home ownership journey after filing for bankruptcy and we can do it for you. Contact us today for a free consultation.