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The short answer is YES, you can!! Since Chapter 7 is a relatively short process and usually concludes within four months after filing, large purchases such as a vehicle or home do not come up often. However, it should be noted that purchasing a car or house is possible, whether during a Chapter 7 or Chapter 13 Bankruptcy matter. If you’re wondering, “How long after bankruptcy can I get a mortgage or car loan?”, we’ve got you covered.
A Chapter 13 Plan is a reorganization of debt that results in the elimination of interest for credit cards and personal loans and also provides time for the bankruptcy filer(s) to repay delinquencies due and owing on a mortgage, vehicle, or taxes. Since a Chapter 13 Bankruptcy is over three to five years, situations such as job changes, vehicle breakdowns, or accidents lead the bankruptcy filer to want or need to change their housing situation or vehicle.
If you’re looking to purchase a car or house after bankruptcy, there is hope! With help from a Philadelphia bankruptcy attorney at Sadek Law, you can return to financial stability and live your life to the fullest. To schedule a free consultation with us, please call our office at 215-545-0008 today.
Selling or Buying a House After Bankruptcy
In recent years, we have seen more of our clients sell their homes than ever before. For a variety of reasons, including relocation, change in housing needs, or to take advantage of the drastic increase in home prices stemming from the pandemic, more Chapter 13 filers opted to sell their homes.
Chapter 13 bankruptcy doesn’t alter the home selling process until an Agreement of Sale is reached. This allows homeowners to select realtors, list their property, and negotiate terms freely, regardless of jurisdiction.
After reaching an Agreement of Sale, the Chapter 13 filer’s attorney must promptly file a Motion to Sell Real Estate with the Court. The Motion hearing typically occurs 30 to 45 days after filing, emphasizing the urgency to secure a Court Order for the sale before settlement.
The Court ensures the home’s sale price covers all expenses, including fees, taxes, mortgages, and debts, while also being fair market value to ensure equitable creditor distribution after deductions.
During periods of low housing prices or interest rates, there’s heightened interest in home buying. For bankruptcy filers who sold property or aim to purchase while renting, they need to file a Motion to Incur Debt. This motion ensures their new mortgage aligns with their previous housing expenses.
When there’s a significant gap between current living costs and desired property expenses, we argue that bankruptcy filers can benefit from tax deductions from owning property, not available while renting. Alternatively, we propose that they could receive rent from family members to offset the increase in housing costs.
Can You Buy a House After Bankruptcy?
Yes, it’s possible to buy a house after bankruptcy, but timing and financial stability are crucial. It’s also essential to show stable income and a solid payment history to improve your chances of mortgage approval. Sellers may also require a higher down payment to purchase a home, so keep that in mind.
How Long After Filing Bankruptcy Can You Buy a House?
After filing bankruptcy, you’ll typically need to wait for your bankruptcy to be discharged before applying for a mortgage or conventional loan. The waiting period varies depending on the type of bankruptcy and the lender’s policies, but it often ranges from one to four years. During this time, focus on rebuilding your credit and establishing financial stability to improve your chances of mortgage approval.
How Long Do You Have to Wait to Buy a House After Chapter 7?
After a Chapter 7 bankruptcy filing, you generally need to wait at least two years before applying for a conventional mortgage. However, some lenders may consider borrowers earlier if they meet specific criteria and demonstrate financial responsibility.
How Long Do You Have to Wait to Buy a House After Chapter 13?
After completing Chapter 13 bankruptcy, you typically must wait at least one to two years before applying for a conventional mortgage. Lenders may consider you earlier if you’ve maintained a good payment record and received court approval. It’s important to improve your credit history and score during this waiting period.
How Long After Bankruptcy Can I Get a Mortgage?
You can typically qualify for a conventional mortgage in one to four years after bankruptcy. This largely depends on the type of bankruptcy you file and the lender’s requirements. We strongly recommend building credit, maintaining stable finances, and demonstrating responsible financial behavior to improve your eligibility for a mortgage.
Are You a First-Time Home Buyer After Chapter 7 or Chapter 13?
First-time homebuyers after Chapter 7 or Chapter 13 bankruptcy can improve their chances of buying a home by rebuilding credit through timely payments, reducing debt-to-income ratio, saving for a down payment, and demonstrating stable employment. It’s essential to wait for the required waiting period after bankruptcy discharge and maintain responsible financial behavior to enhance eligibility for a mortgage.
To improve your credit score, you can get a secured credit card, become an authorized user on someone else’s credit card, pay your bills on time, and dispute any errors on your credit report.
Bankruptcy Home Loans
After filing for bankruptcy, individuals may still qualify for certain types of home loans, including the following.
- FHA loan
- VA loan
- USDA loan
- Conventional loan
Can You Get a Car Loan After Bankruptcy?
Yes, you can get a car loan after bankruptcy, although the terms and interest rates may vary. It can be difficult, but not impossible, to secure loan approval. Some lenders specialize in providing auto loans to individuals with a bankruptcy history, especially if they have established good credit since the bankruptcy discharge. It’s crucial to shop around, compare offers, and consider factors such as interest rates, down payment requirements, and loan terms to find the most suitable option.
Can You Buy a Car After Bankruptcy?
Yes, you can buy a car after bankruptcy. While it may be more challenging to secure financing, especially immediately after bankruptcy, you can take steps to improve your chances. For starters, obtain a copy of your free credit report. You can order multiple free credit reports a year from the three credit bureaus, Equifax, Experian, and TransUnion. Keeping up with the information on your credit report is important, as it helps ensure that everything is accurate and that every positive financial move you make is reported.
How Long After Bankruptcy Can I Buy a Car?
You can typically buy a car immediately after bankruptcy, as there’s no legal restriction on purchasing a vehicle. Securing financing will likely be more challenging initially. It is usually a good idea to focus on keeping up with your credit reports, improving your credit score, and saving up for a down payment until you can secure favorable terms.
How Long Do You Have to Wait to Buy a Car After Chapter 7?
As we mentioned before, there are no time limits on purchasing a car after Chapter 7 bankruptcy. However, many people fear that their “bad credit” post-bankruptcy will hinder their ability to buy a car. While you can buy a car anytime you like, it is worthwhile first to spend some time improving your credit score and personal finances.
How Long Do You Have to Wait to Get a Car Loan After Chapter 13 Discharge?
After Chapter 13 discharge, you may be able to get a car loan immediately, as there’s no specific waiting period. As we’ve mentioned before, it’s important to work on building a more positive credit history and saving up for a down payment first. The attorneys at Sadek Law have considerable experience helping consumers navigate the post-bankruptcy period, so we’re here for you.
Getting an Auto Loan After Bankruptcy
To secure an auto loan after bankruptcy, start by checking your credit report for accuracy and rebuilding credit through timely payments. Save for a substantial down payment and gather proof of stable income. Research lenders specializing in post-bankruptcy financing and compare loan offers. Consider applying for pre-approval to gauge loan options before visiting dealerships. Be prepared to negotiate terms and shop around for the best deal.
While there is no minimum credit score to buy a car, it’s important to work on improving your credit. You can do this through multiple avenues, including a credit builder loan, keeping your credit card balances low, disputing inaccuracies on your credit report, and understanding that building credit takes time.
Buying a Car in Chapter 13 Bankruptcy
In Chapter 13 bankruptcy, changing vehicles is straightforward. It often happens due to changing family needs, repairs, lower payments, or accidents. Regardless of the jurisdiction, the dealership only requires an authorization letter from the Chapter 13 Trustee to approve the purchase of a new vehicle.
The trustee ensures the new vehicle won’t harm the Chapter 13 Plan financially. Typically, they approve monthly payments within 10% of the old monthly payment to avoid budget strain. If you’re in Chapter 13 and want to buy a new vehicle, use the provided trustee link or consult our law office for guidance.
- For Cases that are filed in the Bankruptcy Court for the Eastern District of Pennsylvania and are assigned to Chapter 13 Trustee Kenneth West, click here.
- For Cases that are filed in the Bankruptcy Court for the Eastern District of Pennsylvania and are assigned to Chapter 13 Trustee Scott Waterman, click here.
- For Cases that are filed in the Bankruptcy Court for the District of New Jersey and are assigned to Chapter 13 Trustee Isabel Balboa, click here.
- For Cases that are filed in the Bankruptcy Court for the District of New Jersey and are assigned to Chapter 13 Trustee Albert Russo, click here.
- For Cases that are filed in the Bankruptcy Court for the District of New Jersey and are assigned to Chapter 13 Trustee Marie-Ann Greenburg, click here.
Although a vehicle purchase only requires an authorization letter, the sale or purchase of real property (house) requires the filing of a Motion with the Court and a hearing for Court Approval.
Suggested Waiting Period
Many people fear they’ll never qualify for credit cards, let alone buy a car or home after bankruptcy. I typically advise waiting six months before car shopping and a year before home shopping. Success in securing favorable financing depends on avoiding new debt post-bankruptcy, which can boost credit scores and purchasing ability. Our firm prioritizes discussing the legal process, timing, and financial implications with clients.
Partners Helping Those in Bankruptcy Purchase a Car or Home
Over the years, our office has worked with hundreds of Car Dealerships, Realtors, and Mortgage Brokers. Below is a short list of dealerships and people who have helped our clients in the past and looked out for their best interests when purchasing a vehicle and selling or buying a house:
Car Dealerships That Work With Bankruptcies:
- Burlington Dodge, Jeep, Ram
- Burlington Hyundai
- Conicelli Nissan
Mortgage Lenders That Work With Chapter 13 or Chapter 7:
- Don Scioli
- James Hope
Realtors That Work With Bankruptcies:
- Marta Pilip, Bucks County
- Brian Stetler, Philadelphia
- Michelle Robert, Cherry Hill, NJ
Banks That Work With Bankruptcies for Auto Loans
Certain banks and credit unions will work with borrowers looking to secure an auto loan. Their ability to offer favorable terms varies, but the attorneys at Sadek Bankruptcy Law Offices will help you find the right lender for your situation.
How Sadek Bankruptcy Law Offices Can Help
Brad Sadek, Founding Partner of Sadek Bankruptcy Law Offices, brings expertise in personal and business bankruptcy matters across Pennsylvania and New Jersey. With over 5,000 successful cases and decades of experience, Brad is a sought-after expert witness and legal advisor. If you’re considering bankruptcy or debt relief in the Greater Philadelphia area or New Jersey, contact Brad Sadek at 215-545-0008 or 856-890-9003, or use the provided link to schedule a meeting.