Buying a Home After Chapter 13 Bankruptcy

Reader Question: I filed a Chapter 13 bankruptcy in 2005 and my credit score is at 620 still. When will I be able to buy another home?

Only a mortgage lender can tell you that answer for sure. But I'll try to give you as much input as I can. By federal law, a bankruptcy filing can only stay on your credit report up to ten years. But in most cases, Chapter 13 bankruptcy comes off after seven years. This is relevant to your question because the information in your credit reports is what determines your credit scores.

Here's what Maxine Sweet, VP of public education at the Experian credit reporting company had to say about this:

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.

Now, this doesn't mean you can't buy a house in the meantime. Those are just the "magic numbers" you need to keep in mind, when the Chapter 13 filing will come off your report.

Here's something else to keep in mind. The impact a bankruptcy has on your credit score lessens over time ... if all other factors remain the same. In other words, if you don't have any other issues affecting your credit score (such as overdue bills), then your credit score will likely start to rise. It sounds like yours has remained the same since the filing. If that's the case, you should try to determine what else might be hurting your score.

We have an article on how to read a credit report on another blog here at the Institute, and that's probably worth reading. You might also want to peruse this Q&A session from a couple weeks ago, on the same subject.