A very common question asked of me during a bankruptcy consultation is related to home loans after bankruptcy. Most people are surprised to hear that it is absolutely possible to qualify for a mortgage loan with a bankruptcy. Read on to learn more.
What Happens After a Bankruptcy Discharge
Most bankruptcy cases conclude with a bankruptcy “discharge.” This is the court order that prevents creditors from collecting on debts against a debtor.
Most creditors will close a debtor’s credit accounts after having received notice of a bankruptcy. This means that most debtors are left without access to any credit immediately following the conclusion of their bankruptcy.
Don’t worry. It is very easy to start reestablishing credit after a bankruptcy.
Don’t Wait to Reestablish Credit
Debtors are often flooded with offers for new credit cards and car loans after their bankruptcy cases end. This probably comes as a huge surprise. But think about it this way: lenders can’t make money off of people not utilizing their products. So there definitely is an incentive to give loans to people, even after a bankruptcy.
I strongly encourage my clients to take immediate steps after bankruptcy to reestablish their credit. There is no sense in waiting, especially if the debtor has plans in the future for a new home loan or other large purchase.
Waiting Period for a New Mortgage
In most cases, there is just a two year waiting period for a new home loan after bankruptcy. This means that a debtor only needs to wait two years after their bankruptcy to try to qualify for a new mortgage.
Former clients often call my office asking for copies of their discharge paperwork. They need this paperwork to show their mortgage lender during the application process. In all other respects, the mortgage process is the same as compared to an applicant that did not declare bankruptcy. Lenders consider recent credit history, income, and property details during the application process. Just like a normal mortgage loan.
The good news is that obtaining a new home loan after bankruptcy is much easier than many people anticipate.
Don’t let the fear of the unknown stop you from getting the fresh start that you deserve. Please contact my office at (916) 333-2222 to schedule a bankruptcy consultation at my office in Sacramento, California.
