A Chapter 7 bankruptcy may be the best option that Miami residents who are struggling with debt have at re-establishing themselves financially. Through the discharge of certain debts, filers are able to get out from under their many liabilities and be able to use utilize more of their personal resources to getting back on top of their money management. It is for this very reason why Chapter 7 remains the most popular form of personal bankruptcy (the American Bankruptcy Institute reports that through the second quarter of 2018, over 63 percent of all non-business bankruptcy filings fell under this chapter).
Yet seeking bankruptcy protection is not a decision that should be made lightly, as doing so will inevitably impact one’s credit rating. Many of those who are contemplating filing for bankruptcy will often ask how long it will take to rebuild their credit to the point of being able to borrow money again for large purchases (such as a home). Technically, one can qualify for a mortgage soon after their bankruptcy case is discharged if they have a large down payment. However, in such a situation, they would likely be saddled with an unfavorable interest rate, and if they indeed did have access to such funds so quickly, the chances of ever qualifying for a Chapter 7 bankruptcy in the first place would have likely been remote.
Per Lending Tree, common mortgage programs typically have the following post-bankruptcy qualification waiting periods:
- Conventional: 4 years
- USDA: 3 years
- FHA and VA: 2 years
These waiting periods being when one’s bankruptcy case is discharged. It should be noted, however, that these are the points at which one’s application would be reasonably considered. For many, it may be wise to wait longer in order to qualify for a lower interest rate.