Much of the time I spend with clients is helping them understand the bankruptcy process. However, I do try and help clients understand the consequences of bankruptcy and in doing so one of the first questions I get is how many years must go by before it is possible to get a home loan. You can plan on the bankruptcy filing remaining on your credit report for 10 years. However, it is not a sentence of no credit for 10 years.
Recently I was invited by Debbie Flinn of Bell Mortgage (www.debbieflinn.com) to speak with her to a group of Realtors. She had a handout that outlined how long buyers must wait before obtaining financing after a bankruptcy, foreclosure, deed-in-lieu of foreclosure, and a short sale. It was a great handout and was full of information that everyone going through bankruptcy wants to know. Here is a re-creation of her handout:
Conventional FHA VA
| Chapter 7 Bankruptcy | 4 years from discharge or dismissal date. | 2 years from discharge or dismissal date with exception for extenuating circumstances. | 2 years from discharge or dismissal date. |
| Chapter 13 Bankruptcy | 2 years from discharge date or 4 years from dismissal date. | 1 year of the chapter 13 payout must have elapsed with on time payments. | 1 year of the chapter 13 payout must have elapsed with on time payments. |
| Foreclosure | 7 years from completion date. | 3 years from completion date. | 2 years from completion date. |
| Deed-in-Lieu of Foreclosure | 4 years from completion date. | 3 years from completion date. | 2 years from completion date. |
| Short Sale | 2 years 80% max LTV
4 years 90% max LTV 7 years Max LTV allowed |
1 year from sale date if there were no late payments, otherwise 3 years from sale date. | 2 years from sale date. |
| Consumer Credit Counseling | 1 year of payout must have elapsed with timely payments. | 1 year of payout must have elapsed with timely payments. |
As you can see, while bankruptcy definitely has negative consequences, it is possible to turn your financial life around and even buy a home again in a realtively short period of time. Something I thought was interesting is that consumer credit counseling, or settling your debts, has pretty much the same consequence as a chapter 13 bankruptcy but you don’t get all the added tools and power of the bankruptcy court that a chapter 13 provides.
I offer a free bankruptcy consultation where we can discuss your specific situation and determine if bankruptcy is a good option for you.
Arizona bankruptcy attorney John Skiba can be reached at (480) 420-4028 or via email at john@skibalaw.com .
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John Skiba, Esq.
We offer a free consultation to discuss your debt problem and help you put together a game plan to eliminate your debt once and for all. Give us a call at (480) 420-4028