Yes! You can buy a home after a bankruptcy

A bankruptcy filing does not mean that you cannot buy a home again. Depending on the type loan you qualify for and the circumstances that lead to the bankruptcy, you may be able to buy again in as little as one year after the bankruptcy discharge date.

However, you must be patient and very disciplined about paying all of your debt obligations on time after the bankruptcy filing and during the bankruptcy if you are in a chapter 13 repayment plan. A 30 day late on ANY account may start the clock over again.

Lenders are most interested in actions you have taken since the bankruptcy. You must re-established your credit either by paying your existing accounts on time or opening new accounts and paying them on time –NO LATES!

Many people who file bankruptcy swear off credit altogether. This is a big mistake. No credit accounts mean no improvement in your credit score and no meeting the number of open trade lines required in most loan programs. It is therefore very important to re-establish your credit rating.

How can you obtain credit when your credit has been trashed?

1. Start saving the money you will need to obtain a secured credit card. We recommend getting at least two secured credit cards but be very mindful to read the fine print when comparing secure credit cards. Some are outright scams, while other charge exorbitant interest rates and upfront fees. You should be able to find cards that charge as little as $50/year fee payable upfront. Be certain that they report your account activity to all three credit bureaus. Use the cards to make one or two small necessary purchases, such as gas or groceries and pay the entire balance in full every month.

DO NOT rush out and buy furniture, appliances, jewelry or a new car you do not need just to demonstrate that you are able to make timely payments. Loading yourself with unnecessary debt will reduce your ability to save and will limit the amount of mortgage you can qualify for. Make sure you are making other payments (utility bills, cell phone, etc.) on time as well. You won’t turn things around overnight but your credit score will improve over time.

You must monitor what is on your credit report.

The government site to allow you one free report per year from each bureau is www.annualcreditreport.com . Get a copy of your credit report from each of the three major credit reporting agencies, Equifax, Experian, and TransUnion.

Do not pay to get your score. You are more interested in what the status is listed for your accounts included in the bankruptcy account. Many do not update their records that the account was discharged through bankruptcy and continue to mark you as late every month.

Dispute any credit report errorsin writing to each of the credit bureaus informing them what information you believe to be inaccurate and request deletion or correction. There’s no need to add to your troubled credit history with errors remaining on your credit report.

DO NOT DISPUTE anything on your credit report when you are in the process of making a loan application unless you discuss the implications with your loan officer. If your credit report is in dispute, you may not be able to obtain a mortgage until the dispute has been resolved.

If the item is old or not significant, it may not affect your ability to qualify for the loan. You can always dispute the item after your loan closes.

We have worked with many clients who have had credit problems in the past. Give us a call and we can discuss the best ways to reestablish your credit. Call us today!