People in Virginia who have filed for bankruptcy or who are considering filing for bankruptcy might wonder if they can still buy a house afterward. It is possible to purchase a home after bankruptcy, although certain conditions must be in place for this to happen.
The first thing a lender will look at is what type of bankruptcy a person has filed. A Chapter 7 bankruptcy allows a person to be free of any obligation to pay back debt. With a Chapter 13 bankruptcy, debt is restructured so that a person pays it back over a few years. Lenders look more favorably upon a Chapter 13 bankruptcy since those consumers are repaying a debt.
There is also generally a waiting period after bankruptcy to buy a home. This varies, but for Fannie Mae, there is a wait of at least two years; for the FHA, there is a one-year ban. This time period is usually calculated from the time of the bankruptcy’s discharge or dismissal.
After bankruptcy, people can begin rebuilding credit so that they will look like a better risk for lenders. When people apply for a mortgage, it may be necessary to document the reason for the bankruptcy. If it is for reasons such as job loss or medical expenses, a lender may be more likely to work with the person.
Filing for bankruptcy may be one path to relief from overwhelming debt. Filing for any type of bankruptcy will put an immediate stop to creditor harassment, but filing for Chapter 13 may have an additional benefit. It may allow a person to keep major assets, such as a home. Filing for bankruptcy also puts an immediate stop to any actions against a person relating to the debt, including a lawsuit. Generally, tax and student loan debt cannot be discharged in a bankruptcy.