Qualifying For A Mortgage After Filing A Chapter 7 Bankruptcy Case

Qualifying For A Mortgage After Filing A Chapter 7 Bankruptcy Case

How to Qualifying For A Mortgage After Filing A Chapter 7 Bankruptcy Case?

Filing a Chapter 7 bankruptcy case provides a fresh start in most circumstances. For some Chapter 7 filers, part of receiving a fresh start is buying a house. How do you qualify for a mortgage loan after filing a Chapter 7 bankruptcy case where you were granted a discharge?

First and foremost, do not despair. Do not assume that a Chapter 7 bankruptcy case on your credit history will make buying a house impossible, although it may be a little more difficult. Other factors like your income and the price of the home will affect the final outcome.

To counteract your Chapter 7 bankruptcy case affecting or delaying your eligibility for a mortgage loan, you must be proactive and rebuild your credit by making smart decisions managing your money. Your bankruptcy case and the unfortunate events that prompted it are over. Now is the time for your fresh start and a chance to be smart. You can rebuild your credit sooner than you may think.

One of the fastest ways to rebuild your credit after receiving your Chapter 7 discharge is to get new credit that you can use sparingly enough to easily allow you to pay it down to a zero balance every month.  A secured credit card where you make it deposit and start with a credit limit of 250 or 350 is a great way to build credit.

Paying any of these types of credit lines on time will demonstrate that currently you are responsible for your debts, which will increase your credit score. It is crucial that you do not use a line of credit that you cannot pay each month. Otherwise, you will further harm your credit.

Keep in mind that each type of mortgage loan available after a Chapter 7 bankruptcy will have different requirements.

*For example, your Chapter 7 bankruptcy must have been discharged at least two years prior for you to qualify for FHA mortgage loans.

*VA loans are available to United States Military veterans. You must wait two years after Chapter 7 bankruptcy to apply and meet one service requirement – service of at least 181 days during peacetime; at least 90 days during wartime; or for at least six years in the National Guard.

*The United States Department of Agriculture offers USDA mortgage loans for financing real property in rural areas. You are not eligible for a USDA mortgage loan until three years after the discharge of your Chapter 7 bankruptcy case.

*Unlike the mortgage loans above, a conventional mortgage is not backed by the government. Therefore, the waiting period requirements of these lenders vary widely. The average waiting period for a conventional mortgage loan after a Chapter 7 bankruptcy discharge is four years.

The experienced attorneys at the Morrison Law Group can help you determine if filing a Chapter 7 bankruptcy case is right for you. We work with clients during and after their bankruptcy case to ensure that they truly receive the best fresh start possible. We are Utah’s only statewide bankruptcy law firm and serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.

The Morrison Law Group’s website contains everything you need to help anyone file a bankruptcy case in Utah. The offices of The Morrison Law Group are open from 8:00 a.m. to 5:00 p.m. Monday through Friday. We can help you and any Utah resident file a bankruptcy case from the comfort and safety of your home. We have convenient locations in Ogden, Logan, Sandy, Orem, and St. George. Call 801.456.9933 today to schedule a free consultation.

Theron Morrison

Theron Morrison

Utah’s top bankruptcy and consumer protection attorney.