Purchasing a home after filing for bankruptcy

Both Chapter 7 and Chapter 13, two forms of individual bankruptcy, often make a person's life more financially sound after the filing. However, while personal bankruptcy can go a long way towards forming a better financial future, many filers have questions regarding what life will be like afterwards. For instance, many filers might wonder if they may be able to buy a home again after bankruptcy and, if so, how long that process might take.

Residents of northern Mississippi will likely have to exercise a bit of patience with regard to home buying after bankruptcy. While bankruptcy can bring immense debt relief, as well as other benefits such as the ability to stop repossession, it will have an effect on a filer's credit score. Mortgage lenders are typically wary of lending to someone whose bankruptcy has not yet been discharged. This can actually work in a filer's favor, however, as it gives the individual time to get back on solid financial ground before making the financial commitment of a mortgage. Typically, individuals must wait about 24 months after a bankruptcy discharge before being considered for attractive mortgage rates.

After a bankruptcy has been discharged it's important to carefully review your credit report - or rather, the report from each of the three major credit bureaus. There may be debts that have been repaid or discharged which erroneously still appear on the report; these can thwart a person's chances of appearing creditworthy to a lender.

Those who have filed bankruptcy in the past will generally want to start rebuilding their credit. This can be achieved in many different ways, but common methods include obtaining a secured credit card, taking out a modest personal loan or getting a manageable auto loan.

Life after bankruptcy can be full of questions, such as those regarding home ownership. It's important to know that personal bankruptcy can actually stop foreclosure in some cases, so many filers get to keep their homes.

Source: Realtor.com, "How to buy a home after bankruptcy," accessed Jan. 11, 2015

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