Submitting yourself to bankruptcy proceedings may allow you to feel immediate relief from your financial burdens. However, in the wake of your case, you may have to carry around several negative consequences. For one, you may have to wait a while until you can successfully obtain a mortgage loan to buy a new home for you and your family. This is all to say that you must understand the full breadth of bankruptcy’s repercussions before you take the plunge by declaring it. Well, follow along to find out the waiting period for a mortgage loan after bankruptcy and how a proficient Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can help you explore your options during this timeframe.

What is the waiting period for a mortgage loan after Chapter 7 and Chapter 13 bankruptcy?

A Chapter 7 bankruptcy case comes with the benefit of eliminating your unsecured debts. But on the flip side, the elimination of your unsecured debts may reflect poorly on your credit report. And subsequently, it may make it more difficult to obtain a mortgage loan after your bankruptcy case is discharged. Without further ado, you may expect the following waiting periods for the following mortgage loan types:

  • You may expect a four-year waiting period for a conventional loan.
  • You may expect a three-year waiting period for a United States Department of Agriculture (USDA) loan.
  • You may expect a two-year waiting period for a Federal Housing Administration (FHA) or United States Department of Veterans Affairs (VA) loan.

As for a Chapter 13 bankruptcy case, you may be expected to reorganize your debts and pay them off within a three- to five-year repayment plan. Therefore, taking ownership of your debts and paying them off on time and in full may look favorable in a mortgage lender’s eyes. That said, you may expect the following:

  • You may expect a one-year waiting period for a USDA loan.
  • You may expect an FHA or VA loan as soon as your Chapter 13 bankruptcy case is dismissed or discharged.
  • You may expect a conventional loan within four years of your Chapter 13 dismissal date or two years of your discharge date.

How does this waiting period change if I underwent multiple bankruptcies?

Unfortunately, you must anticipate a longer waiting period if you had to file for multiple bankruptcies within the past seven years. Specifically, you may expect at least a five-year waiting period for any mortgage loan type. Of note, this countdown starts on your most recent bankruptcy’s dismissal or discharge date.

The silver lining is that you may take this time to rebuild your credit score. So when the time is right, you may have an easy experience obtaining a mortgage loan.

In conclusion, there is far more to explain than this blog has only begun to cover. For more information, please get in touch with a talented Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center. We look forward to collaborating with you.