Bankruptcy Home Purchasing

bankruptcy home purchasing

Understanding Your Home Purchasing Options Before, During, & After Bankruptcy

Many borrowers incorrectly assume that filing for bankruptcy means they will lose their home. And some people hesitate to file for bankruptcy because they believe it will make them ineligible to purchase a new home in the near future — or even that it will prevent them from ever purchasing a home.

bankruptcy home purchasing lawyers in atlanta

At Holston & Huntley, we’re here to dispel the assumptions that bankruptcy home purchasing is impossible. They simply aren’t true, and, if you believe them, they might stop you from taking advantage of the financial reorganization that bankruptcy provides. In most cases, filing for bankruptcy puts borrowers in a better financial position to qualify for a home purchase when they’re ready.

Our Atlanta legal team can provide the guidance you need. Call (678) 928-7729 or contact us online today.

bankruptcy home purchasing: before filing

The reason why bankruptcy can jeopardize real estate is because it’s a type of secured debt, meaning it’s secured by collateral, and it cannot be discharged through bankruptcy. Your lender has the contractual right to seize your home through foreclosure if you fall behind on payments. But the level of risk depends on the unique factors of the homeowner’s circumstances.

The effect that bankruptcy will have on your home generally depends on 3 factors:

1

The type of bankruptcy you file
2

Whether you can stay caught up on mortgage payments through the end of the bankruptcy process
3

What equity you may be able to protect under state or federal exemption laws

Purchasing a Home After a Bankruptcy Filing

If you want to buy a home after bankruptcy, there are just a few things to consider. Generally, two years must pass since the discharge date of your bankruptcy filing before you can qualify for an FHA mortgage loan.

You can usually prove that this time has lapsed by providing the mortgage company with a credit report. However, if the credit report does not verify the discharge date—or if additional documentation is necessary to determine if any liabilities were discharged in the bankruptcy—you’ll need to provide the mortgage lender with the bankruptcy and discharge documents.

Chapter 7 “liquidation” bankruptcy DOES NOT disqualify you

from obtaining an FHA-insured mortgage if, at the time of case number assignment, at least two years have elapsed since the date of the bankruptcy discharge. During this time, you must have re-established good credit or chosen not to incur new credit obligations.

An elapsed period of less than two years (but not less than 12 months) may be acceptable if:

You show that the bankruptcy was caused by extenuating circumstances beyond your control; and
You have exhibited a documented ability to manage your financial affairs in a responsible manner.

Get in Touch with Us Today

Purchasing a home and navigating the bankruptcy filing process can be challenging. It often involves multiple statutes, rules, and procedures—but, with the right legal help, it is possible. The process will be much easier if you consult our team at Holston & Huntley. We provide trustworthy and prudent legal advice, prioritizing your interests every step of the way.

We offer free consultations and payment plans for Ch. 7 bankruptcies. Call (678) 928-7729 or contact us online today!