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Serving clients across Minnesota
with 9 convenient office locations.

Buying a home post-bankruptcy

Buying a home is an important goal for many people in Minnesota, including those who have less than stellar credit histories. The good news is that getting a home loan is possible even for those who have been through a bankruptcy. There are some caveats to that, however.

Understanding the end of bankruptcy

One term that people need to be familiar with is a discharged bankruptcy. A bankruptcy is considered discharged when the court-approved plan has been completed. In Chapter 13 bankruptcy, this happens after the debtor has made all the payments in their wage-earner plan. That can take as much as five years.

In Chapter 7 bankruptcy, discharge only takes a few months in most cases. However, Chapter 7 can involve liquidating the debtor’s assets to satisfy creditors. It offers less control for the individual who filed.

Applying for a new loan

After a bankruptcy is discharged, you should expect to wait at least two years before applying for a new home loan. For conventional loans, the period will be longer. However, there will likely be creditors who are willing to work with you. They will review all of the documents about your credit score and bankruptcy discharge very closely before making an approval decision.

Getting a loan after a bankruptcy can be difficult, but it’s doable. One important step is to get and keep your financial house in order after filing. The lawyer you worked with during your bankruptcy may be able to help you with this. For example, they may be able to refer you to a financial advisor or a program that will help you learn to budget.

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