Many Louisville area residents have had financial problems in their life. There are so many circumstances that can arise, at no fault of the individual, where their financial circumstances can change seemingly overnight. An unexpected medical condition, for example, can spiral out of control and land a family in thousands of dollars of debt. Many times, people have no other option except to declare bankruptcy because of the debt they have accumulated. Those who have gone through a bankruptcy may wonder if they will ever be able to move on and purchase a house.

Purchasing a house after bankruptcy can happen. A bankruptcy doesn’t mean the end of a person’s financial freedom. Instead a bankruptcy can be a tool to lift the burden of debt and start fresh with a new financial outlook. The dream of owning a home can be part of a person’s future. Most people are able to apply for a home loan around 2 years after bankruptcy, although some mortgage lenders have a shorter time frame. The time is measured from the date of discharge of debt. Generally, the more time between the discharge of debt and the loan application can mean the less risky a potential client can be.

An important step after the bankruptcy process if over is reestablishing good credit. Maintaining good credit is key to a good financial future. A person should not open excessive accounts during this time and should open on paying just a few accounts on time for 12 months. Before a person applies for a mortgage, they should know what their credit score is and check their credit report for any errors. Also, a mortgage lender requires a detailed letter explaining why their client declared bankruptcy and why the bankruptcy was the result of extenuating circumstances beyond their control. A lender will also need proof of these extenuating circumstances such as doctor’s notes, death certificate, etc.

Buying a house after bankruptcy is possible. Declaring bankruptcy is a way for a person to make a new start when they have no other options. But it doesn’t have to mean that their financial future is ruined forever.