Buying a Home After a Bankruptcy Filing
Reader Question: Will I be able to buy a home after filing bankruptcy? I filed the bankruptcy in such a way that I made weekly payments to pay everything back. This has been discharged for years. I have a good job that I've been at for more than eight year. How do I get started?
This is pretty common question we get, so I'm always happy to answer it. In my view, you can never provide too much information or help to struggling consumers. So let's get right to it...
If you filed bankruptcy with a debt repayment plan, which you have indicated, I can assume that you filed a Chapter 13 bankruptcy. Other types of bankruptcies, such as Chapter 7, do not include repayment of debt. Regardless of which type of bankruptcy you filed, there are limits to how long it can stay on your credit report. These limits are outlined in the Fair Credit Reporting Act (FCRA).
In general, a bankruptcy can stay on your credit for up to 10 years. If it's a Chapter 13 filing, it might be removed from your credit report after 7 years. Maxine Sweet, who is the vice president of public education for Experian (one of the credit reporting agencies) had this to say about their policies:
Based on your question, I'm not exactly sure how many years it has been since you filed. But just keep these time limits in mind. More importantly, don't just assume that the bankruptcy will be removed from your credit file when the time limit is reached ... verify it yourself by getting copies of all three credit reports (from Experian, TransUnion and Equifax) and make sure it gets removed. If the bankruptcy stays on there longer than it should, you can dispute it through the reporting company's website. The aforementioned FCRA laws require them to make such corrections.
Now with all of this being said, it's important to make another point about bankruptcies, credit scores, and mortgage loans. The way a bankruptcy affects your credit score will lessen over time. It has a big impact at first, but as the years pass it has less of an impact. This is even more true if you have been financially responsible in the meantime.
So now you have two homework items, if you haven't done them already:
Get copies of all three credit reports to see if the bankruptcy information is on there. It will be listed under the "Public Information" section of your report. Here's a helpful article on how to read your credit information. Remember, the legal limit for bankruptcy to remain on your reports is 10 years, but it could very well be removed after 7 years. Only one way to find out if it's on there!
Next, request your credit score so you can see where you stand. There's a bunch of information on this blog about the kind of score you need to get a home loan in this economy. But you obviously need to know what your score is before you can use that information.
You can get your credit reports once a year for free, through AnnualCreditReport.com. You'll probably have to pay a nominal fee for your credit scores -- I've seen the cost range from $19 to $29. If you'd like to get everything all at once (with other products such as credit monitoring), you can get package deals through some websites. We recommend Credit.com for this purpose, and you can access their package deals from the Credit Tools section of our website.
I hope that helps you some. If you have any follow-up questions, just type them into the Q&A box at the top of the blog. Good luck!
This is pretty common question we get, so I'm always happy to answer it. In my view, you can never provide too much information or help to struggling consumers. So let's get right to it...
If you filed bankruptcy with a debt repayment plan, which you have indicated, I can assume that you filed a Chapter 13 bankruptcy. Other types of bankruptcies, such as Chapter 7, do not include repayment of debt. Regardless of which type of bankruptcy you filed, there are limits to how long it can stay on your credit report. These limits are outlined in the Fair Credit Reporting Act (FCRA).
In general, a bankruptcy can stay on your credit for up to 10 years. If it's a Chapter 13 filing, it might be removed from your credit report after 7 years. Maxine Sweet, who is the vice president of public education for Experian (one of the credit reporting agencies) had this to say about their policies:
Bankruptcy can be reported for up to 10 years from the filing date ... Experian reports Chapter 13 bankruptcy for seven years because it includes partial debt repayment. Chapter 7 bankruptcy remains for 10 years from the filing date because none of the debt is repaid.
Based on your question, I'm not exactly sure how many years it has been since you filed. But just keep these time limits in mind. More importantly, don't just assume that the bankruptcy will be removed from your credit file when the time limit is reached ... verify it yourself by getting copies of all three credit reports (from Experian, TransUnion and Equifax) and make sure it gets removed. If the bankruptcy stays on there longer than it should, you can dispute it through the reporting company's website. The aforementioned FCRA laws require them to make such corrections.
Now with all of this being said, it's important to make another point about bankruptcies, credit scores, and mortgage loans. The way a bankruptcy affects your credit score will lessen over time. It has a big impact at first, but as the years pass it has less of an impact. This is even more true if you have been financially responsible in the meantime.
So now you have two homework items, if you haven't done them already:
Get copies of all three credit reports to see if the bankruptcy information is on there. It will be listed under the "Public Information" section of your report. Here's a helpful article on how to read your credit information. Remember, the legal limit for bankruptcy to remain on your reports is 10 years, but it could very well be removed after 7 years. Only one way to find out if it's on there!
Next, request your credit score so you can see where you stand. There's a bunch of information on this blog about the kind of score you need to get a home loan in this economy. But you obviously need to know what your score is before you can use that information.
You can get your credit reports once a year for free, through AnnualCreditReport.com. You'll probably have to pay a nominal fee for your credit scores -- I've seen the cost range from $19 to $29. If you'd like to get everything all at once (with other products such as credit monitoring), you can get package deals through some websites. We recommend Credit.com for this purpose, and you can access their package deals from the Credit Tools section of our website.
I hope that helps you some. If you have any follow-up questions, just type them into the Q&A box at the top of the blog. Good luck!
Labels: Credit scores
posted by Brandon at
11:47 AM
