Bankruptcy and its effect on Rental vs Home Ownership
In keeping with the American Dream, all of our clients also wonder if, after the filing of their bankruptcy petition, they too will be able to purchase a home someday. While it is true that the filing of a bankruptcy will remain on your credit report for 7 to 10 years – this DOES NOT mean that you are ineligible to rent or own a home during all of that time. In fact, oftentimes filing for bankruptcy and receiving your discharge will help you qualify for the purchase of a home since the debit portion of your debit to income ratio has been drastically reduced.
Many of our clients are surprised to learn that renting or purchasing a home during bankruptcy is both allowed and possible, albeit a bit more challenging.
Renting – Landlords often, if not routinely, run credit checks on potential tenants. While the filing of the bankruptcy will appear on that “check” this does not mean that you do not qualify to rent. It just means that the landlord may ask you to provide a letter explaining the cause of your current financial situation and/or ask you for reference letters from prior landlords or employers.
Buying – For those seeking to buy or refinance it would be worthwhile to look into or research FHA insured mortgages, which have specific guidelines/requirements that can help a potential borrower in bankruptcy qualify for financing. Those that are conditionally approved will have to request court permission to finalize the finance and authorize the purchase of their little piece of the “American Dream.”
If you are considering filing for bankruptcy and have questions about your eligibility contact our office at 305-826-1774 for a free consultation. Let us help you achieve a fresh start and set you on the path to fulfilling your version of the “American Dream.”