The bankruptcy declaration eliminates all your debts, but severely reduces your credit score to take on a future home loan. However, an experienced bankruptcy lawyer can help you with proper financial planning towards rebuilding your credit score and getting through the waiting period to applying again for a home loan.
The Law Offices of John W. Lee, P.C has expertise in bankruptcy, criminal, family, personal injury, traffic offenses, and estate planning law. They are among the well-known Chapter 13 bankruptcy law firms serving cities across Virginia including Hampton Roads. Since 2002, they have been providing top-quality services with the help of six experienced lawyers.
When Can You Buy a House after Bankruptcy?
The type of bankruptcy you have filed will decide the waiting period to take a loan. Following are the types of bankruptcy that you can file –
- Chapter 7 Bankruptcy – Here, the Virginia court sells your non-exempt assets to pay your unsecured debts. You may lose most of your possessions. The court wipes away all your debts but badly impacts your credit report and credit score. It appears on your credit report for 10 years. The waiting period for a conventional loan is four years, the USDA loan is three years, and VA and FHA mortgage is two years.
- Chapter 13 Bankruptcy – In this type, your bankruptcy attorney in Virginia creates a repayment plan to clear your secured debts and it does not affect your credit report and credit score. It is the best choice if you have enough income to refund your debts as per schedule. It appears on your credit report for 7 years. The waiting period for some loans gets shortened like for conventional loans is two years and other loans are one year.
How to Improve Your Chances of Getting a Loan after Bankruptcy
If you have filed bankruptcy, some Virginia Government guaranteed mortgages are the quickest way to get a home loan than a conventional loan.
Here are a few ways to improve your creditability –
- You can rebuild your credit report and score by on-time payments of your monthly bills using your credit card.
- You can write a letter of explanation to the lender, it is not a requirement to get loans, to explain to them the reason for declaring bankruptcy and the situation at present.
- After your waiting period, get a preapproval letter from the lender that tells your eligible loan amount and responds to the lender inquiries your credit report.