Filing for bankruptcy in Kentucky may be a way to overcome significant debt, but there are potential long-term consequences that may affect your decision. Many people think that it is not possible to get a mortgage after filing for bankruptcy. Fortunately, that belief is generally untrue. Rebuilding your credit and your financial stability may allow you to obtain a mortgage in just a few years after going through bankruptcy.
According to realtor.com, you may obtain a mortgage after going through bankruptcy, especially if you understand what lenders are looking for and work on regaining control of your finances. Most lenders impose a two-year waiting period for applicants who file for bankruptcy. You may use this time to rebuild your credit and save money for a down payment. However, if you meet the qualifications for an FHA or VA loan, you may only have to wait one year. The government backs these two types of loans, so you may be able to obtain one sooner after bankruptcy than a conventional loan.
The type of bankruptcy you file for may affect future mortgage applications. For example, you may be able to re-establish your credit more easily if you file for chapter 13. This type of bankruptcy reorganizes your debt so you pay for it over time through reasonable monthly payments. By continuing to pay off your debt, you may look like a responsible applicant in the eyes of a mortgage lender. You may improve your loan prospects by monitoring your credit report to make sure there are no errors that persist after the bankruptcy process.
This information on a post-bankruptcy mortgage is intended to educate and should not be interpreted as legal advice.