While it is a dream of nearly everyone to become a homeowner, it can be pretty challenging. With the bankruptcy filing, the dream might appear even more distant. But, we assure you that it is not!
Purchasing a House after Filing Bankruptcy
While we agree that bankruptcy can be an unfortunate experience, it does not at all mean that you won’t be able to buy a home for yourself. Indeed, bankruptcy results in a poor credit score, but you can always rebuild it over time.
We understand how most people out there are concerned that once you have filed for bankruptcy, the dream to own a home goes down the drain. Well, what if we tell you that filing for bankruptcy can be your first step towards becoming a homeowner? In fact, you won’t even have to wait long for the bankruptcy process to end before you can purchase a home! Speaking of this, make sure you hire a real estate agent who is well acquainted with bankruptcy attorneys.
Moving on, one thing that determines how soon you can become a homeowner after a bankruptcy filing is the bankruptcy type you have opted for. Other factors include the lender, in addition to the credit report. Before we dive in further, let’s discuss the types of bankruptcies.
A common term for this is a liquidation bankruptcy. A trustee supervises the case, and responsibilities include taking ownership of the assets. In Chapter 7, the trustee sells and distributes all non-exempt assets. To put it exactly, the funds from these pay off all or some of the debt.
Chapter 13 bankruptcy involves formulating a repayment plan as a way to consolidate the debts. The finances undergo reorganization under the eye of the courts. The debtors must stick to the plan and pay off all the creditors within a span of 3 to 5 years. Another term for Chapter 13 is ‘wage earners repayment plan.’ The individuals must pay a set monthly amount to the trustee.
How Long Before You Can Buy a House After Bankruptcy?
Simply put, the period varies. However, the bankruptcy must be discharged if you want to be eligible for a house loan. For the unaware, bankruptcy discharge refers to an order from a court that exempts the debtor from liabilities that come with certain debts. It restricts the creditors from collecting on the discharged debts. In other words, the debtors don’t need to pay off the discharged debts. Similarly, the creditors cannot demand a payback.
A discharged debt is the first step on the ladder. The process does not end here. However, this is something that lenders note. Speaking of this, discharged debts are often a clear indication that the court will very soon mark the said bankruptcy case closed.
With respect to Nevada, around two years after discharge is when you will be able to buy a house. Your credit history should be positive. Moreover, it is pertinent to mention that a Chapter 13 filer’s waiting period will be shorter than the one filing for Chapter 7.
Your credit score is the most important factor when it comes to bagging a mortgage loan. Therefore, it is crucial to take proper measures if you want to build a credible credit score after filing bankruptcy. This is because a lender would always look for it to deduce your creditworthiness.
It is true that bankruptcy filing stays for ten years on credit reports. However, you don’t have to wait for full ten years in order to secure a mortgage.
You can expedite the process by ensuring that your credit report is not only accurate but fully up-to-date. Speaking of this, make sure to look for debts on your credit report that you have already paid in addition to the discharged ones. This is because the law prohibits reporting discharged debts in the credit report. If there is a mistake and any of this debt is mentioned in your credit report, make sure to reach out to an attorney to discuss your options.
We hope that this piece has helped and clarified that a bankruptcy filing is not really an obstacle in your dream of becoming a homeowner. In fact, filing for bankruptcy gives a relief from debt that can actually prove to be fruitful. It can speed up when it comes to rebuilding the credit score. This, in turn, increases the chances of you becoming a homeowner as soon as possible. It can be tricky to understand the rules regarding bankruptcy. Therefore, it is better to discuss your case with an experienced Nevada professional attorney.
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