Home Purchasing Options Before, During, and After Bankruptcy
Purchasing a Home before Bankruptcy Filing
Many borrowers incorrectly assume that if they file for bankruptcy protection they will either lose their home, not be able to purchase or new home, or will be forever prevented from purchasing a home. However these incorrect assumptions prevent borrowers from taking advantage of the financial reorganization that bankruptcy allows. Most times filing for bankruptcy protection puts borrowers in a better financial position to qualify for a home purchase.
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. If at the time of case number assignment at least 12 months of the pay-out period under the bankruptcy have elapsed. To qualify, the Borrower’s payment performance must be satisfactory, all payments have been made on time, and the Borrower has received written permission from bankruptcy court to enter into the mortgage transaction.
Purchasing a Home after a Bankruptcy Filing
Generally, two years must have passed since the discharge date of any bankruptcy filing prior to a borrower qualifying for a FHA mortgage loan. A borrower must prove that this time has lapsed. However, this is accomplished by providing the mortgage company with a credit report. If the credit report does not verify the discharge date or additional documentation is necessary to determine if any liabilities were discharged in the bankruptcy, borrowers must obtain the bankruptcy and discharge documents and provide it to the mortgage lender.
A Chapter 7 bankruptcy (liquidation) DOES NOT disqualify a Borrower 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, the Borrower 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 to people unfamiliar with the subject. It often involves multiple statutes, rules, and procedures. You should seek legal assistance from a knowledgeable bankruptcy attorney, mortgage lender, and real estate agent.
Areas of Service
We serve people throughout Georgia, including but not limited to Metro Atlanta, Georgia; Marrietta, 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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