Obtaining a Mortgage After a Chapter 13 Discharge

In a Chapter 13 Bankruptcy filing, payments are made to a Trustee for a set amount of time. Once all the payments have been made, the person who filed the bankruptcy is “discharged,” or released, from all debts that were part of the Chapter 13 repayment plan.

Many people believe that they may never be able to obtain a mortgage after a bankruptcy filing.

This is not the case. In fact, it is often easier to be approved for a mortgage with a bankruptcy filing on one’s credit report than continuing to incur financial distress. For example,:

if a person is unable to pay bills, is sued by a credit card company, and continues on a downward financial spiral, this will make it extremely difficult to be approved for a mortgage.

By putting a stop to this with a Chapter 13 Bankruptcy filing with an attorney, the outlook for a owning a future home is bright. Lenders often look at a bankruptcy filing as proof of an effort to try and repay some of the debts owed, rather than continue to drown in debt and avoid creditors for long periods of time. The long-term result of a bankruptcy filing is positive, not negative, for the person looking to be approved for a mortgage.

Waiting Periods After a Bankruptcy

Once a filer is discharged from the debts stemming from their bankruptcy filing, there are different waiting periods depending on which type of mortgage loan you are looking for.

  • For an FHA loan, the waiting period is generally 1 year from the date of discharge.
  • For a VA loan, the waiting period is generally 1 year from the date of discharge.
  • For a conventional loan, which has stricter requirements since they are not guaranteed by the government, the waiting period is generally 2 years from the date of discharge.

Owning a home after a Chapter 13 bankruptcy discharge is definitely a possible goal for anyone who has filed Chapter 13.