STATEN ISLAND, N.Y. — Filing for bankruptcy isn’t usually the first choice for people who find themselves drowning in debt. But sometimes it’s the only avenue for getting back on track with your finances.
While a bankruptcy can alleviate your debt, it also puts a major scar on your credit score. But the good news is that blemish on your credit isn’t permanent. And if you pay your bills on time following a bankruptcy, you can gradually rebuild your credit to get approved for credit cards, home loans and more.
We sought advice from Karra L. Kingston — a bankruptcy lawyer on Staten Island and in New Jersey who has helped hundreds of people get out of debt — to find out how past bankruptcies will impact your ability to buy a home.
Q. Will I ever qualify for a mortgage after filing For bankruptcy?
Kingston: “Most people who file for bankruptcy are able to qualify for a mortgage after filing. However, what you qualify for and how long you have to wait will depend on your unique situation.
If you have filed a Chapter 7 bankruptcy, the typical waiting period for a conventional loan is four years from when the court discharged your debt. Typically, this will give you time to work on repairing your credit.
Government backed loans generally have less waiting periods. For first-time homebuyers, a Federal Housing Administration [FHA] loan or a VA [Veterans Affairs] loan will [require] you to have to wait two years from your bankruptcy discharge.
If you filed a Chapter 13 bankruptcy, most of the same waiting period applies. One exception to this is that government-backed loans, like a USDA loan, only requires a one year waiting period. While FHA and VA loans can generally be applied for after the Chapter 13 discharge.
There is a misconception that once you apply for bankruptcy, you can’t get a mortgage. This is completely false. There is no law or rule stating that people who file for bankruptcy can’t be approved for a new mortgage. Bankruptcy laws were enacted to help people start over.
To ensure that you get a decent mortgage rate after filing for bankruptcy, it is important to take the proper steps to rebuild your credit score. This means paying your bills on time each month.”
If you have a financial question you’d like answered, please send to [email protected] and we’ll find the right expert to answer your question.
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Source: silive.com