How to Buy a House While in Chapter 13 Bankruptcy

Buying a house while you're in Chapter 13 bankruptcy is not as impossible as you might think. With a bit of hard work and some careful budgeting, home ownership can be accomplished during bankruptcy. It's usually best to wait until a bankruptcy is discharged before attempting to get a mortgage, but there are ways to get one without waiting.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• Credit report

1. Establish a positive repayment history with your Chapter 13 bankruptcy repayment plan. A two-year history of paying your creditors while in bankruptcy will help convince lenders to work with you and show them you are serious about repaying your debts. It's possible to get a loan with a shorter repayment history, but waiting two years will greatly increase your chances for success.

2. Discuss your plans with your trustee as soon as you begin to consider applying for a mortgage. If your trustee, who's responsible for overseeing the repayment of your debts, does not believe you can afford to make mortgage payments, he may prevent you from getting court permission to buy a house. Also, ask for the current payoff balances of the debts to be repaid. Paying off some debts can make your trustee more comfortable with the idea.

3. Get the court's permission to purchase a home. The rules for asking the court's permission to buy a home while in Chapter 13 vary by state. Consult your trustee and your bankruptcy attorney about your state's rules. If your trustee does not approve of your home ownership plans and encourages the court to deny your request, you can appeal the decision. Your bankruptcy attorney probably will be able to help you do this or she will refer you to an attorney who can.

4. Obtain a copy of your credit report. After you have the court's permission to apply for a mortgage, you must ensure the approval of your application. Getting a copy of your credit report will give you time to dispute any inaccuracies the report may contain.

5. Contact a lender that is willing to work with individuals in Chapter 13 bankruptcy. These companies will often require a minimum credit score and proof that your obligations are being repaid. Search the Internet for well-reviewed lenders that have experience working with home buyers who are in Chapter 13.
   
   If you are on good terms with your trustee, discuss possible lenders with them. Your trustee might be able to recommend good mortgage companies that are willing to lend to people in Chapter 13. If your trustee is unable to help, ask your bankruptcy attorney for advice and referrals or even local real estate agents.

Tips & Warnings

• Always consult your bankruptcy attorney if you have questions regarding how additional debt will affect your Chapter 13 bankruptcy. When getting a copy of your credit report also obtain your current credit scores. While it is possible to get your credit report for free once annually, you will probably have to pay for your credit scores. It is possible to get credit scores for free by trying credit monitoring services, but if you feel that you will never use the services, it is often best to pay the fee for your credit scores.

References

• State Bar of Georgia Bankruptcy Information
• Free Annual Credit Report

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[zipaustin]

on 10/28/2009 Wow. I didn't realize you could buy a home so soon after chapter 13.

[zipaustin]

on 10/28/2009 Wow. I didn't realize you could buy a home so soon after chapter 13.