Years ago you could get a mortgage shortly after filing for chapter 10 bankruptcy. But that’s changed in recent years. If you’ve recently filed for chapter 7 bankruptcy and want to know how this will affect your ability to get a mortgage in the near future – keep reading.
What Is Chapter 7 Bankruptcy?
While Chapter 13 bankruptcy requires repayment simple repayments, Chapter 7 is different in that it involves the liquidation of an individual’s personal assets to pay back the debt that is owed. Chapter 7 bankruptcy will remain on your credit report for 10 years and will negatively affect your prospects to get credit of any kind. If you do get a mortgage, however, expect the interest rates to be very high.
Do Everything You Can To Improve Your Credit Score
After you’ve filed for chapter 7 bankruptcy and your debt is being paid off, don’t become lax in your spending. Pay all your bills on time. And maintain the highest credit score you can under the circumstances. This is the most important step to obtaining a mortgage following a Chapter 7 bankruptcy.
A Two Year Wait Before You Can Apply For a Mortgage
According to the FHA you need to wait 2 years after being discharged from your debt obligations following Chapter 7 bankruptcy. Only then can you apply for a mortgage. To ensure you’re approved as well, talk to your mortgage lender about your credit history and maintain a good credit score. You should also meet the FHA’s other requirements.
Life continues after filing for Chapter 7 bankruptcy. You’ll still be able to apply for a mortgage and get approved if your credit report doesn’t show any other reckless spending.