Thomas F. Miles, Attorney and Counselor at Law
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Getting a mortgage after a personal bankruptcy discharge

For those in California who have gone through serious financial difficulties, reaching the other side of those troubles brings a deep sense of relief. Shedding the burden of extensive debt and there resulting collections efforts can feel like a particular type of freedom, one that is often hard-won. For many, personal bankruptcy is the means through which financial freedom was attained, and the years following that process are spent rebuilding financial stability and restoring a solid credit rating.

Once an individual or family has fully recovered from a period of financial turmoil, the next step often involves purchasing a home. While it is commonly believed that bankruptcy will eliminate a consumer from the mortgage market, this is simply not true. With the right degree of attention and effort, individuals can secure a mortgage in the years following a successful bankruptcy discharge.

For those who filed Chapter 7, the required waiting period before applying for a mortgage is four years. For those who choose Chapter 13, the waiting period is two years following discharge. However, marking those date on one's calendar is not the best way to approach the hunt for a mortgage. Savvy consumers will wait until their credit score has climbed back up over 680 in order to become eligible for the best available rates and terms.

Buying a home after a personal bankruptcy is not an impossible dream. Lenders are more than willing to take a chance on a borrower who has gone through a difficult financial period, as long as that person has a demonstrated history of managing credit responsibly. For those in California who are ready to put in the hard work to regain financial stability after bankruptcy, owning a home is an attainable goal.

Source: The New York Times, "Mortgages After Bankruptcy", Lisa Prevost, Oct. 30, 2014

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