Will Hiring a Bankruptcy Lawyer Prevent You From Buying a Home?

Many people fear that after they hire a bankruptcy lawyer and go through the filings, they will have their credit ruined to the point where they will be unable to buy a home. This is a valid concern. Filing for Chapter 7 or 13 will take its toll on your credit report. You will become persona non grata when it comes to getting credit cards and you’ll be an unlikely candidate for buying a new car. But houses are a little different. As strange as it may seem, a big purchase like a house is easier for a creditor to approve than a smaller line of credit, simply because the house has so much intrinsic worth, even in foreclosure. While it may not be as easy as it would be otherwise, buying a house should certainly not be impossible.

Any reputable bankruptcy lawyer will tell you that filing will mean taking a hit to your credit report. Your credit report is what banks and other lenders rely on to tell them if you are worth taking a risk on. When they see that you have filed, it is virtually a given that they will be stamping your application “Not Approved” in big red letters. For seven years—the length of time something of this nature stays put on your credit report—you will have to get used to buying things in cash. But of course, buying a house with cash is probably not going to be reasonable.

Fortunately, things don’t have to be quite so bleak when it comes to buying a house. Your first order of business is to wait a couple of years after filing until you begin looking for a home loan.

During this time, your goal should be to get back in a financially stable situation. You shouldn’t have additional credit problems to worry about, so concentrate on moving forward in your career, building up a solid savings account, and paying off your creditors to the agreements set forth by your bankruptcy terms. If you can show that you have done all of these things, a bank may be willing to extend you the money necessary to purchase a house.

The more money you can put down up front, the better your chances of buying a good house and securing a better loan. Banks like to see their customers come through with an investment of their own before they come off their money. If you can put three percent or more down at signing, you’ll see your opportunities open up when it comes to getting a good loan. What may have seemed impossible when you were hunting for a bankruptcy lawyer may now very well be within your grasp.

As any bankruptcy lawyer will tell you, filing to discharge your debt isn’t the end of the world. It simply means you got in over your head once. Turn the ship around, and you’ll soon see that there are brighter skies ahead.