Often people file for bankruptcy when they are trying to get rid of their unbearable financial burdens. It offers them a fresh start that can change the situation for them a lot. Now, when you are trying to do so, have you considered the possibility that you might buy a home? Bankruptcy cannot stop you from buying a home so to speak. But when you are filing for bankruptcy, it will have a negative effect on your credit report. And that can prevent you from getting a loan for your house. However, you need to make some considerations when you are filing for bankruptcy, and that way you can buy a home too. Talk to our Pittsburgh bankruptcy lawyer for that.Getting Home Loan After Filing for Bankruptcy
Depending on the type of bankruptcy, your credit report will contain the information. Generally, for home, you can get an FHA loan after two years of your bankruptcy filing. However, there are some exceptions where you can get the FHA loan even before two years.
If you have filed Chapter 7 bankruptcy, then you will have to prove a few things to get the approval of your FHA loan. First, you will have to submit proof that you had to file bankruptcy to recover from some difficult financial situation that was beyond your control. Secondly, you have to prove that your income has substantially decreased, more than 20%, in the preceding 6 months. You will also have to prove that the repeat of the circumstances that caused the bankruptcy in the first place will never happen again.
For chapter 13, you will have to show proof that you have made all the payments on the right date for one year. You will also need court approval to get an FHA loan in this case.Time of Discharging Debts Through Bankruptcy
Once you file for bankruptcy, you will be disqualified to get a home loan. Depending on the type of bankruptcy you have filed, you can get the discharged debts and after that, you can get rid of the liability of paying the creditors.
For chapter 7 bankruptcy, the debtor has to wait for three to four months to get the debts discharged. However, the debts that will survive bankruptcy will include child support, alimony, taxes, fines and penalties of a criminal act, retirement plans, and property liens.
If you are filing Chapter 13 bankruptcy, the process will be discharged by the time you make all the payments according to the plan. However, a hardship discharge can wipe out your debts if you can prove that you are going through extreme difficulty due to a situation completely beyond your control and it is impossible for you to carry on the payments.Reestablishing Credit After Declaring Bankruptcy
Even though bankruptcy can solve the issue of overbearing debts and expenses, yet, it can cause some serious damage to your credit score. This can result in the rejection of your loan applications. Repairing your credit after the bankruptcy discharge means you have to create a new line of credit that will entail getting a new credit card, making payments on time with that, and consistently paying off credit card balances at right time.
If you need any further information or guidance from Pittsburgh bankruptcy lawyer, then come to us at Pittsburgh Bankruptcy Law Group. We are here to help you.