There are pros and cons of filing for bankruptcy. There are also many myths that get in the way of making the right decision.
One of the top myths is that you cannot purchase a home after bankruptcy. If you believe this to be true, you may never move forward with the filing process, thus holding yourself back from reaching a better financial position.
Simply put, bankruptcy is not the end of home ownership. It will definitely make things more difficult on you in the future, but it doesn't mean you will never again be able to purchase a home.
The most important thing to remember is that there is a waiting period associated with buying a home after bankruptcy. For example, each type of loan has a distinct waiting period after Chapter 7 bankruptcy. This includes:
-- Conventional mortgage: four years
-- USDA home loan: three years
-- VA home loan: two years
-- FHA loan: two years
As you can see, you don't have to wait nearly as long as you initially thought. Even if you had a conventional mortgage, you only have to wait four years after filing Chapter 7 bankruptcy to apply for a loan.
The most important thing to remember is that you have been given a fresh start. You need to be careful of every decision you make, as you want your finances to be in good shape when it comes time to once again apply for a mortgage.
It's hard to believe that you can buy a home after bankruptcy, but it is 100 percent possible.
Source: The Mortgage Reports, "Don’t Think You Can Buy Again After Bankruptcy? Actually, You Can," Adam Lesner, May 20, 2016