People desirous of procuring home loans after bankruptcy, face an uphill task on account of many reasons. However, there are ways to procure these loans.
Filing bankruptcy does not always result in the petitioner having to give up home ownership. Whether a person retains ownership of the house or whether the home is repossessed in lieu of debt obligations, depends on a number of factors.
Retaining Home Ownership Despite Filing Bankruptcy
Filing Chapter 13 allows the owner to retain possession of the home, since Chapter 13 is a wage-earner's plan. This plan allows the petitioner to discharge debt obligations under a different set of covenants, within a maximum period of 5 years. Filing Chapter 7 and signing a reaffirmation agreement, results in the debtor being bound to the mortgage despite the filing. The debtor continues making mortgage payments, regardless of the filing, thus retaining home ownership. This may be advisable, since filing Chapter 7 allows the petitioner to retain only a part of the equity in the primary residence. Moreover, making regular mortgage payments is also desirable from the perspective of improving credit scores.
People who are interested in buying a home after bankruptcy find it hard, especially in the current scenario when most lenders are unwilling to lend money to less creditworthy individuals. However, following tips can be helpful in fulfilling your dream.
