A common myth about personal bankruptcy is that it ruins your credit score for the rest of your life. Some people have the wrong impression that someone who goes through Chapter 7 or Chapter 13 bankruptcy will never get approved for a mortgage, business loan or credit card in Louisiana again.
This is not true. Filing for bankruptcy protection does affect your credit score, but only temporarily. It can take a few years, but by taking steps to rebuild your credit, you should be able to take out a mortgage to buy a home at a reasonable interest rate.
Waiting periods for home mortgages from Louisiana lenders
It generally takes at least two years after your bankruptcy case is over before you can be accepted for a mortgage. Here is a breakdown of the most common types of mortgages and how long you will have to wait before you can get approved:
- Conventional mortgage (Fannie Mae or Freddie Mac): four years
- USDA mortgage: three years
- VA mortgage: two years
- FHA mortgage: two years
In many cases, people struggling with debt can use bankruptcy to help keep their homes. Other times, bankruptcy filers end up selling their home or losing it to foreclosure. Whether you stay in your home or move into rental housing, your ability to borrow money to buy real estate could be restored after two to four years. In the meantime, you should focus on paying your bills and proving that you are a good credit risk.
For more information about credit rebuilding and being a homeowner after bankruptcy, consult a bankruptcy attorney. Their guidance should not only help you choose the best form of personal bankruptcy for yourself and your family but also put you back on the path to financial well-being.