How Soon After Chapter 7 and Chapter 13 Bankruptcy Can I Buy a House?


Filing for bankruptcy can be an intimidating, life-altering process, and it can leave you in a very vulnerable financial position. But bouncing back from bankruptcy isn’t impossible, and it certainly doesn’t mean you should give up your hopes of buying a house for you and your family!

Even after filing for bankruptcy, you may be able to receive a home loan in just a few years. If you work to improve your credit profile and thoroughly prepare your available mortgage options, you can make finding and purchasing your perfect home a reality!

But before we talk about recovering from bankruptcy, let’s talk about what the word “bankruptcy” actually means.

What is Bankruptcy?

Here’s the Investopedia explanation of bankruptcy to help you understand it a bit more:

“A legal proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor (most common) or on behalf of creditors (less common). All of the debtor’s assets are measured and evaluated, whereupon the assets are used to repay a portion of outstanding debt.

Upon the successful completion of bankruptcy proceedings, the debtor is relieved of the debt obligations incurred prior to filing for bankruptcy.”

Chapter 7 bankruptcy and Chapter 13 bankruptcy are two of the most common forms of bankruptcy, and depending on which you choose (or is available to you), your home-buying experience upon discharge may vary.

When you file for bankruptcy, you’re offered a “fresh start” in a sense, as some debts are forgiven or paid off based on what assets you have available at the time.

Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy

Chapter 7 bankruptcy and Chapter 13 bankruptcy are vastly different – each one is best fitted to a certain type of financial situation. Here are a few details about both options:

Chapter 7 Bankruptcy

If you want to file for Chapter 7 bankruptcy and be freed from certain debts like medical bills and credit card bills, you’ll have to show proof that you have little or no disposable income. So, Chapter 7 bankruptcy is designed best for people who aren’t making much money (or any money at all) and don’t have any assets.

Chapter 13 Bankruptcy

Unlike Chapter 7 bankruptcy, people who file for Chapter 13 bankruptcy typically have a regular source of income and assets and must repay at least some of their debt with a repayment plan, usually over a 3-to-5 year time frame. With Chapter 13 bankruptcy, you can keep your property, so it’s a good option for people who just need a little extra time to catch up on their finances.

How soon after bankruptcy can I buy a house?

You can probably imagine that recovering from bankruptcy financially can take some time. Let’s break this question down based on what kind of bankruptcy you’re facing so you can understand the most accurate answer possible for your specific situation.

How soon after Chapter 7 Bankruptcy can I buy a house?

After a Chapter 7 discharge, you will likely have to wait four years to get a conventional home loan. However, you may be able to get FHA or VA financing in as little as two years.

How soon after Chapter 13 bankruptcy can I buy a house?

You may be able to get a conventional home loan two years after your Chapter 13 discharge. As far as FHA or VA financing, those options could be available in as little as a year if you meet certain requirements.

If you have more questions about how to buy a house after bankruptcy, feel free to reach out to me, Dagmar Rogers. As a real estate agent serving Austin, Killeen, and the surrounding areas, I’d love to help however I can.

Contact me today by calling or texting 254-258-0777.