| What is bankruptcy? | | | | legally declared bankrupt. No lender will trust your |
| Bankruptcy can be defined as the legal inability for a | | | | financial ability for years. this might also affect you |
| person or a business to pay its debts. The major | | | | from financing a new home. |
| cause for bankruptcy is financial instability of a person | | | | Financing down payment: |
| or a business. Other reasons might be sudden | | | | For any body to finance your new home, you must |
| recessed in the economy or an act of God or illness, | | | | be able to put down a certain percentage as |
| pending unemployment and so on. These reasons | | | | down-payment. This might not be totally realistic for |
| might cause an entity to file for bankruptcy. | | | | a person that has gone through bankruptcy to do. |
| Types of bankruptcy: | | | | This might be another disadvantage to a debtor. |
| Filing for bankruptcy might be a very challenging thing | | | | Unemployment/ income ratio: |
| for anyone involved but it can also be a coast guide | | | | Most of the time a person declared bankrupt might |
| to the people involved against debtors. There are | | | | find it difficult to get a good job. If however he |
| two types of ways to file for bankruptcy. Filing for | | | | succeeded finding one, it might still take years for him |
| chapter 7, this refers to a voluntary or an involuntary | | | | to finance a home. For a financier to work with you |
| situation. The debtor liquidates his assets in a way for | | | | to finance a new home, he has to do a loan |
| repayment of the debts. But chapter 13 way of | | | | verification, to check if your income corresponds with |
| bankruptcy allows the debtor to keep his property, | | | | your potential repayment plan. This is however |
| while he schedules methods for the repayment of | | | | difficult to do since you would need to stay in that |
| loan. | | | | job or that industry for some years. This might be |
| How can bankruptcy affect your buying a home? | | | | discouraging, |
| One of the things that are affected by bankruptcy is | | | | However, the negative can be overwhelming but the |
| your credit rating. The effect of bankruptcy on your | | | | positive side is that in spite of all, you can get a loan |
| credit rating will sometimes stay for many years. | | | | within a year after a series of repayment schedule. |
| With your credit rating marred, you can hardly see | | | | You can apply for a loan from Federal Housing |
| any lender to work with you. And that means | | | | Administration loans. The FHA will give a loan to |
| financing a new home might not be visible for some | | | | people that had filed chapter 7 bankruptcy. |
| years. | | | | Another thing that would allow you to buy a new |
| Integrity | | | | home is that the VA policy will discharge anyone |
| You will need to build a fresh new integrity. This is | | | | whose discharge has been over two years. |
| because the financial integrity you might have built | | | | So don’t be entirely discouraged. |
| prior to bankruptcy disappeared as soon as you are | | | | |