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Scott Bilker is the founder of DebtSmart.com and the author of Talk Your Way Out of Credit Card Debt, Credit Card and Debt Management, and How to be more Credit Card and Debt Smart. Send your questions about money, credit, loans, mortgages, or debt, to him at: Scott Bilker, PO Box 563, Barnegat, NJ 08005-0563 or online at: http://www.debtsmart.com/askscott

Scott,

How hard is it to buy a house after filing for chapter seven bankruptcy? How long will it take to get a house? What are some of the things I need to do before even going to try to buy a house?

Rachel

First let me say that bankruptcy is certainly not the end of your credit life. I know many people that have filed bankruptcy and went on to rebuild their credit very quickly--and buy a house!

Bankruptcy will show up on your credit report for 10 years. That means that every mortgage lender will certainly see that fact when evaluating your mortgage application.

Although it may be difficult to find a bank to give you a mortgage, it's certainly not impossible. Banks want to make money and you may find one that's willing to take the risk. You can increase your chances by coming into the deal with as much cash as possible. The more money you can use as a down payment, the less risk for the bank. There is a level where they'll lend you the money because the house secures the loan and the house is worth far more than the mortgage.

In summary, cash will solve this problem. However long it takes to gather that cash is how long it will take to get the house. I would shoot for at least 20 percent down.

I'm guessing that you don't have that kind of money or you wouldn't have filed for Chapter 7 in the first place, but now that you have a clean slate, it's time to start building your wealth, saving, and getting ready for that house.

Start thinking about how you can make money in your spare time, selling online at eBay, doing freelance work, or starting your own business on the side.

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Reader comments about this article:

"I enjoyed reading that wealth of information. I have been searching the Internet for that answer. I truly thank you and hope you go a long way in your life and business. :)" 
--Yolanda Williams

"You are so right! It's been less than a year now that I have filed, however, my husband got into a terrible car accident, but has totally recovered within the year of our bankruptcy. We got a lawyer right away, and we might be blessed with 150,000 dollars. From bankruptcy to riches. However, we've been trying to buy a house, but they want 20% down. That's at least $30,000. What should I do. Money don't come easy like this, and when will we be cleared to only put 10% down and still pay the same monthly mortgage payment as if we put down 20%. We are caught in a bind. What should we do. If we put down $35,000 we'll get a house, but we won't have any money for savings!!!!!!!" 
--Annette

"I like the positive aspect of the article. I just filed bankruptcy and it was good to know that it is not the end of my credit life. I would like to buy a house within a year and it made me feel pretty confident. Thanks!" 
--Jeannine Tillman

"I particularly liked the advice and the estimated percentage of savings that should go toward a house after filing Chapter 7 bankruptcy." 
--Michelle Allen

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