{"id":121463,"date":"2020-01-23T14:30:14","date_gmt":"2020-01-23T21:30:14","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=121463"},"modified":"2024-02-17T15:50:11","modified_gmt":"2024-02-17T22:50:11","slug":"can-i-get-a-mortgage-after-bankruptcy","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/can-i-get-a-mortgage-after-bankruptcy","title":{"rendered":"Can I Get a Mortgage After Filing for Bankruptcy?"},"content":{"rendered":"

Disclaimer: The views, thoughts, and opinions expressed in this article solely belong to the author and are given from the perspective of a real estate investor. They are not intended to be legal advice. You should always consult your attorney and\/or other professional advisor when it comes to bankruptcy.<\/em><\/p><\/blockquote>\n

Even though we have a robust economy and unemployment rates are at historic lows, individuals and businesses are still filing for bankruptcy. Thankfully, the rate of bankruptcy filings has declined substantially since the 2010 peak, when nearly 1.6 million bankruptcies were filed. In fact, the rate of total U.S. bankruptcy filings for 12 months ending September 2019 was 776,674\u2014almost half the 2010 amount. [1]<\/p>\n

The prospect of going bankrupt is frightening and something most want to avoid at all costs. But bankruptcy doesn\u2019t have to be the end of the financial road. In fact, it can be a useful tool to help both individuals and businesses get a financial fresh start.<\/p>\n

Can You Get a Loan After Bankruptcy?<\/h2>\n

One concern that individuals who have filed for bankruptcy have is whether they will ever be able to borrow again. In this article, I\u2019ll take a closer look at the answer to that question. It depends in part on the specific circumstances, including the type of bankruptcy filed.<\/p>\n

There are six types of bankruptcy, but this article will focus on the two most common: Chapter 7 and Chapter 13. Before I dive into the different options for getting a mortgage loan<\/a> after bankruptcy, it is helpful to provide some context with a quick overview of Chapter 7 and Chapter 13.<\/p>\n

\"woman<\/p>\n

What Is Chapter 7 Bankruptcy?<\/h3>\n

Chapter 7<\/strong>, also known as liquidation bankruptcy, is the most common form for individuals. This type of bankruptcy is structured for those who do not have the ability to repay debts. In a liquidation bankruptcy, most of the debtors\u2019 property is sold and used to pay off debts.<\/p>\n

What Is Chapter 13 Bankruptcy?<\/h3>\n

Chapter 13<\/strong> is also known as a reorganization bankruptcy. A Chapter 13 bankruptcy is structured for those who have the means to repay debts but need time and a plan to do so. Under Chapter 13, a court-mandated repayment plan is established, and the debtor can often keep their property if it is carried out successfully.<\/p>\n

When it comes to borrowing after bankruptcy, Chapter 13 debtors will have to wait longer to get a \u201cfinancial fresh start,\u201d as they must first successfully complete their repayment plan. This may take up to five years.<\/p>\n

Those filing for Chapter 7 bankruptcy can get a fresh start sooner, as there is no repayment plan to satisfy\u2014but they usually lose their property.<\/p>\n

Related: <\/em><\/strong>BiggerPockets Money Podcast 50: Rebuilding Your Financial Life After Bankruptcy with Patrice Washington<\/a><\/em><\/p>\n

When to File for Bankruptcy<\/h2>\n

The reasons an individual files for bankruptcy can factor into the future prospects of obtaining a loan and the post-bankruptcy waiting period required by lenders. Some of the more common reasons individuals file for bankruptcy are listed below. [2]<\/p>\n

Medical expenses are a big one. Even though there have been recent attempts by the government to address this issue, serious and chronic medical conditions are still the main reason individuals file for bankruptcy. In fact, two-thirds of people who file for bankruptcy cite medical issues as a key contributor to their financial downfall. [3]<\/p>\n

Other reasons may include:<\/p>\n