Buying a House After Bankruptcy in Wisconsin

Is buying a house possible after bankruptcy, and why is a bankruptcy attorney important?

When we file bankruptcy, we want to start over financially, but most of us are curious what comes next. Can some buy a house after bankruptcy in Wisconsin or elsewhere in the US? That will be revealed on this page.

For those who plan to file for bankruptcy, their major concern is their current condition, but some forget what occurs after bankruptcy due to current bankruptcy law or forgetting their responsibilities. If you want to buy a house after bankruptcy, you need Wisconsin bankruptcy lawyers like Miller & Miller Law, LLC to advise you before, during, and after your bankruptcy filing.

What is Bankruptcy?

The bankruptcy process allows individuals or businesses who cannot pay their debts to seek relief. This official statement states that a person or organization cannot pay their debts and wants court-supervised protection from creditors.

The most common types of bankruptcy in the US are Chapter 7 and Chapter 13, each with its own rules and procedures:

Chapter 7

Chapter 7 bankruptcy, sometimes known as “liquidation” bankruptcy, involves selling non-exempt assets to pay creditors. Some property may not be liquidated under state or federal law. Most debts are discharged after liquidation, so the debtor no longer has to pay them.

Chapter 13

Chapter 13 bankruptcy, sometimes known as “reorganization” bankruptcy, allows individuals with stable incomes to create a repayment plan to pay off debts over a three to five-year period. This allows the debtor to maintain their assets and pay creditors on schedule according to the plan.

Can I Buy A House After Bankruptcy?

Yes, it is possible to buy a house after bankruptcy. However, the process will vary depending on the type of bankruptcy you filed, your individual circumstances, and the type of loan you are applying for.

When to Buy a House After Bankruptcy?

Anyone can buy a home after bankruptcy, but it takes work. Buying a home requires fulfilling bankruptcy conditions and waiting time.

How Long After Bankruptcy Can You Buy a House?

How long you have to wait to buy a home after bankruptcy depends on whether you filed for Chapter 7 or Chapter 13 bankruptcy and what kind of financing you desire. Being qualified for a house loan after bankruptcy requires the bankruptcy judge to discharge your case. After the patience test, the length of time depends on your bankruptcy type and loan type.

• Chapter 7

Chapter 7 bankruptcy, the most common, erases most unsecured debts, significantly affecting your credit score. After bankruptcy, creditors impose a “seasoning period,” delaying mortgage applications for conventional, USDA, VA, and FHA loans by 4, 3, or 2 years, respectively.

• Chapter 13

Chapter 13 bankruptcy offers a structured repayment plan with steady payments for debts and legal fees, resulting in a lower credit impact and shorter loan wait time compared to Chapter 7. Conventional loan eligibility requires four years after bankruptcy dismissal, while discharge requires four years from filing and two years from discharge.

Chapter 13 payments must be timely to prevent court disruption and house purchase delays. Conventional loans require four years after dismissal or filing and two years after discharge; USDA loans require one. FHA and VA loans require bankruptcy dismissal or discharge before application, however, FHA guarantees a mortgage 12 months after Chapter 13 filing if court-ordered payments are made.

• Multiple Bankruptcies

Consider the expense of multiple bankruptcies. If you have filed many times in the past seven years, you must wait five years before getting a house loan. If you can establish extenuating circumstances, the waiting period may be shortened to three years.

Using Government-Backed Loans to Purchase a Home After Bankruptcy

You’re more likely to select an FHA or VA loan if you don’t have a sizable sum of money to utilize as a down payment.

Federal Housing Administration (FHA)

A division of the Department of Housing and Urban Development (HUD), they give first-time homeowners and people with less-than-perfect credit scores a chance. Instead of lending, the FHA backs individual lenders. In addition to the waiting period, the loan may require a minimum credit score.

Veterans Affairs (VA) Loan 

The VA’s mortgage lending program appeals to veterans since there is no down payment. VA home loans have a two-year waiting period after Chapter 7 discharge. Most VA lenders require a minimum credit score, so you’ll need strong credit while waiting. (Military and injured veterans have special bankruptcy regulations such as The Servicemembers Civil Relief Act, Means Test Considerations, Debt Relief Agencies andExemption for Disabled Veterans).

How to Improve Your Chances of Getting a Mortgage after Bankruptcy

Manage your finances to improve your credit score before declaring bankruptcy. This involves arranging expenses, separating necessary and frivolous spending, and saving. After bankruptcy, recover credit by sticking to a budget and avoiding mistakes.

Improve your credit by paying bills on time and strategically using a new credit card with a monthly debt. Avoid exorbitant fees and interest rates. While a car loan may improve your credit, be cautious with additional debt after bankruptcy. After bankruptcy, mortgage lenders may have higher requirements for pre-approval, but it shows commitment for potential homebuyers.

Call our Wisconsin Bankruptcy Lawyers Now!

Buying a house may seem simple, but it depends on your condition and capacity, especially if you are in bankruptcy. This article covered the most typical facts about buying a house after bankruptcy, but we’re just scraping the surface. Consult a lawyer for details about buying a house after bankruptcy.

Wisconsin bankruptcy attorney Miller & Miller Law, LLC, is the ideal example of a legal practitioner who can discuss housing buying after bankruptcy. Miller & Miller Law, LLC, offers free case evaluations, tax debt resolution, debt negotiation, and workers compensation. 

Buying a house after bankruptcy requires reviewing your bankruptcy type and present condition. The process of buying a house is complicated. Wisconsin bankruptcy lawyers like Miller & Miller Law, LLC, can help you buy a house after bankruptcy. Talk to our Wisconsin bankruptcy lawyers about your chances.