Many a Tennesssee resident found themselves in the difficult position of filing for bankruptcy during and after the great recession. Even with an improving economy, many more continue to struggle with unmanageable levels of debt and have chosen bankruptcy as their option to help them secure a better financial future. One of the big concerns many people who file for bankruptcy have is how they can ever buy a home again.
There is no one answer to this question as there may be many variables including the type of bankruptcy filed and whether or not a foreclosure also occurred. According to FHA.com, a consumer who is in the midst of an active Chapter 13 bankruptcy might actually be able to qualify for a new home loan.
In order for this to happen, the bankruptcy trustee must approve the transaction and the buyer must be able to provide a detailed explanation of what led to the bankruptcy and show how their circumstances have changed. Also, payments on the Chapter 13 plan must have been made on time for at least 12 months.
Smart Asset notes that for consumers who have experienced a foreclosure, the wait times might be between three and seven years. Different types of loans and lenders will have different requirements but the need to provide proof of a better financial footing remains consistent. Consumers are urged to use the time after foreclosure to save for a down payment and to improve their credit scores. These two things may help them improve their odds of being approved for a new home loan.