For many in Salem, homeownership is a dream that they are still chasing. If you count yourself among this group, yet also face overwhelming debt that’s close to driving you to bankruptcy, then you may wonder if your decision to file would permanently bar you from ever qualifying for a mortgage. If so, then that would also preclude the 10,789 other people in New Hampshire who sought bankruptcy protection last year from enjoying the same benefit.

The idea that a bankruptcy will permanently sink your credit rating is untrue. A Chapter 13 bankruptcy only remains on your record for seven years, while Chapter 7 filings remain for 10 years. However, that’s not to say that in either event, you have to wait that long before being considered to be serious candidate for a home loan again.

The only requirement that you have to meet to secure a mortgage after bankruptcy is to have your bankruptcy be discharged. Once that happens, you may be in a good position to qualify as quickly as a year later. Achieving that goal, however, could be quite challenging.

If your past bankruptcy was a Chapter 7, you need to prove the following points if you want your application for mortgage to be taken seriously:

  •          Your income had been reduced by over 20 percent for at least six months prior to your filing date.
  •          The circumstances which resulted in your bankruptcy were largely out of your control.
  •          Your current financial situation suggests that you will be able to avoid such struggles in the future.

If your bankruptcy was a Chapter 13 and you are hoping to qualify for a new mortgage after one year, you need to be able to prove that you’ve remained current on your repayment schedule for at least one year.