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Can you purchase a house after bankruptcy?

On Behalf of | Jun 29, 2020 | Bankruptcy

Sometimes the unexpected can happen to a Mankato area resident. There are times when financial matters can get the best of someone and there aren’t many other options except to declare bankruptcy. Declaring bankruptcy doesn’t mean a person has had a financial failure, only that a person needs help to start their life over again. Once a bankruptcy gets completed, a person may wonder if they will ever be able to purchase a house.

A bankruptcy doesn’t need to be the end of a person’s financial future. There are many reasons why a person has to declare bankruptcy. They could have had an unexpected medical event and now have thousands of dollars in medical bills. Or they may have had to rack up credit card bills because of a job loss or unexpected car maintenance. Regardless of the reason, a person wants to move past this time and have a new start.

Purchasing a home can be one of the most satisfying events of a person’s financial life. The dream of home ownership is something that many people work for and they may wonder if after declaring bankruptcy it will ever be fulfilled. Luckily, there are things a person can do to make the dream of home ownership a reality. After a bankruptcy, a person will typically need to wait two years to apply for a loan. During those two years a person should work on reestablishing their credit. They should open a credit card and work on paying it off each month. They should also request their credit report and check for any inaccuracies.

Once a person is ready to start the mortgage process, they should draft a letter explaining why they had to declare bankruptcy that includes proof of the extenuating circumstances, including medical bill statements, death certificate, severance paperwork, etc. When a mortgage lender sees a movement from bad credit to good credit they are much more likely to issue a mortgage loan.