Bankruptcy Home Purchasing: Your Options Before, During, and After

Purchasing a Home before Bankruptcy Filing

Many borrowers incorrectly assume that filing for bankruptcy protection means they will lose their home. And some people hesitate to file for bankruptcy because they believe it will make them ineligible to purchase a new home in the near future — or even that it will prevent them from ever purchasing a home.

We’re here to dispel these incorrect assumptions. Because they aren’t true, and if you believe them, they might stop you from taking advantage of the financial reorganization that bankruptcy allows. In fact, most times, filing for bankruptcy protection puts borrowers in a better financial position to qualify for a home purchase when they’re ready.

Purchasing a Home during a Chapter 13 Bankruptcy Filing

A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA- insured mortgage during their bankruptcy. At the time of your case number assignment at least 12 months of your pay-out have elapsed, you could be in a great place to qualify for a mortgage loan.

To qualify, the your payment performance must be satisfactory, all payments have been made on time, and you have received written permission from bankruptcy court to enter into the mortgage transaction. these are all fairly simple tasks. You could be closer to homeownership than you think — even during Chapter 13 bankruptcy.

Purchasing a Home after a Bankruptcy Filing

If you’re considering buying a home after your bankruptcy, there are just a few things to consider. Generally, two years must have passed since the discharge date of any bankruptcy filing prior to a borrower qualifying for an FHA mortgage loan.

You can usually prove that this time has lapsed by providing the mortgage company with a credit report. However, if the credit report does not verify the discharge date — or if additional documentation is necessary to determine if any liabilities were discharged in the bankruptcy — you’ll need to obtain the bankruptcy and discharge documents and provide them to the mortgage lender.

A Chapter 7 bankruptcy (liquidation) DOES NOT disqualify you from obtaining an FHA-insured mortgage if, at the time of case number assignment, at least two years have elapsed since the date of the bankruptcy discharge. During this time, you must have re-established good credit or chosen not to incur new credit obligations.

An elapsed period of less than two years, but not less than 12 months, may be acceptable if:

  1. The Borrower shows that the bankruptcy was caused by extenuating circumstances beyond their control.
  2. The borrower has exhibited a documented ability to manage their financial affairs in a responsible manner.

Purchasing a home and navigating through a bankruptcy filing can be confusing and complicated. It often involves multiple statutes, rules, and procedures — but it’s not impossible with the right legal help. You can make the whole process a lot easier and smoother if you consult a bankruptcy attorney, mortgage lender, and real estate agent.

Georgia Bankruptcy Attorneys | Areas of Service

We serve people throughout Georgia, including but not limited to Metro Atlanta, Georgia; Marietta, Smyrna, Dallas Georgia, Douglasville, Riverdale, Clayton County, Alpharetta, DeKalb County, East Point, College Park, Conyers, Athens, and Macon, Georgia. We provide trustworthy and prudent legal advice, keeping your interests foremost in our mind. To schedule a free initial consultation, call us at 1 (844) Ga-Buddy, 1 (404) 474-2970 or contact us online. There is no cost to you, and you are under no obligation to pursue a filing with us. We look forward to serving as your Counsel!

Don’t risk attempting to file your petition alone in an attempt to save money. You face a high risk of having your petition rejected if you are unsure how to navigate the Bankruptcy Code. We offer free consultations for both Ch. 7 & Ch. 13 Bankruptcies!

 

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Holston & Huntley, LLC, Attorneys & Lawyers Bankruptcy, Atlanta, GA
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