I network with a lot of business professionals from around the financial sector because rules and information changes so frequently that I can’t keep up with all of it. Over a cup of coffee a few weeks ago, I was talking with experienced mortgage broker, Brigitte Archer of Oxford Capital in Lake Forrest, California and here’s what she had to say about qualifying and buying a home after bankruptcy.
HUD announced that borrowers can qualify to purchase a home One Year after a bankruptcy discharge, if the borrower can show that the bankruptcy was caused by extenuating circumstances beyond his or her control and has since exhibited a documented ability to manage his or her financial affairs in a responsible manner. Brigitte agrees, “Program Requirements are for Purchase Transactions Only; Housing counseling must be completed 30 days prior to the loan application. The bankruptcy, foreclosure of short sale MUST be related to the loss of job or 20% income reduction for at least 6 months; and credit must have been satisfactory for a minimum of 12 months after the event.”
This is great news for anyone faced with the difficult decision to file bankruptcy due to unmanageable debt that cannot be eliminated within 5 years. The 5 year term is used because a court ordered repayment bankruptcy under Chapter 13 of the Bankruptcy Code can allow repayment of all or part of a consumer’s debt within 5 years.