Misguided legal advice can hurt anyone, but especially those individuals considering or in the midst of a bankruptcy proceeding. Although family and friends usually mean well, misguided or inaccurate bankruptcy advice can negatively impact your decision or the outcome of your bankruptcy situation. Too often, this form for ill-advice comes in the form of dire warning like, “Bankruptcy ruins your credit for 10 years,” and “You’ll never be able to buy a house.”
The best step to take is to seek the advice of an experienced Central Valley bankruptcy attorney who can guide you in the direction that is best for your particular needs.
The Truth About Bankruptcy and Mortgage Loans
Owning a home is important to most Californians. In fact, as of late 2019, 56.3% of California households lived in a residency they owned. Although this rate is significantly lower than the U.S. average and just 10 states have a higher percentage of renters, homeownership is on the rise in California. That is why most people are hesitant in filing bankruptcy – the fear of not qualifying for a mortgage loan stops them from filing bankruptcy.
There are many different factors that come into play even without bankruptcy in the mix, when qualifying for a mortgage loan. And while bankruptcy does impact your ability to get a mortgage loan, the waiting period is much shorter than most people have been led to believe.
The Threshold on Post-Bankruptcy Mortgages
There are different post-bankruptcy waiting periods for different types of mortgage loans. Some of these are discussed below:
Federal Housing Administration (FHA) & Department of Veterans Affairs (VA). These loans are the most lenient types of mortgage loans that you may be eligible for just two years after a Chapter 7 bankruptcy discharge. And since most Chapter 7 bankruptcy filings are completed in 4 to 6 months, this means you may be eligible to purchase a home through one of these programs about 2.5 years after filing.
Conventional mortgage loans. Conventional mortgage loans may be more difficult to qualify for after Chapter 7 discharge. The average waiting period is four years – still a far cry from the “10 years” or “never” bankruptcy mythology.
The bottom line is that if you are overwhelmed by debt and are having a difficult time stabilizing your finances, the fact that you want to one day own your home should not stop you from considering bankruptcy. It is best to immediately consult with an experienced Central Valley bankruptcy attorney for the best advice given your specific situation.
Call an Experienced Central Valley Bankruptcy Attorney
For more information or to schedule a complimentary consultation with Central Valley bankruptcy attorney Gurjit Srai, please call 209-323-5558, or complete our online form.