Montgomery, AL Attorneys Counsel Bankruptcy Clients Who Want to Buy a Home

Alabama Bankruptcy Law Firm Helps Debtors Become Homeowners

Bankruptcy is not a permanent black mark on your credit. You will have the ability to rebuild your financial life, and even buy a home if you choose to do so.

Bankruptcy and Buying a Home

During a chapter 7 bankruptcy, the court will discharge all your qualifying debt, but your credit will be impacted negatively.

• Once your chapter 7 bankruptcy concludes, you will typically be required to wait a minimum of four years after your bankruptcy is discharged before you will be able to get a conventional home loan.
• To qualify for a USDA loan, you will typically need to wait three years.
• To be eligible for a VA or FHA loan, you will need to wait two years after the discharge.

Because chapter 13 bankruptcy is a reorganization of your debt, it won’t have as major an impact on your ability to buy a new home as chapter 7. You can buy or sell a home while in chapter 13 bankruptcy, but the court will need to approve the transaction.

If you wait until your bankruptcy is finalized, you will still likely have to wait before you can qualify for a home loan.

• If your bankruptcy was dismissed prior to discharge, you will still be subject to a four-year wait after dismissal before you can qualify. And, it will be more difficult because you will still owe the debt that was listed in your bankruptcy.
• If your bankruptcy was discharged by the court, the waiting period will be four years but you will have a clean slate because most, or all, of your debt will now be gone.
• USDA loans typically require a one year waiting period following a chapter 13 bankruptcy discharge.
• FHA and VA loans only require that your bankruptcy be discharged before you can apply.

Contact an Experienced Montgomery, AL Bankruptcy Attorney