5 ways to get financing with bankruptcy in your past


There is good news and bad news when it comes to obtaining financing after bankruptcy. The good news is that you can get financing after a judge acquits or rejects your bankruptcy. The bad news is, you’ll probably have to wait awhile and save some money. With that said, here are five ways to get financing.

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1. Conventional loan

If you have filed Chapter 7, the most common type for individuals since debts are written off and you want a conventional loan, you will have to wait at least four years after a judge releases or rejects your bankruptcy. If you’ve filed Chapter 13, also known as reorganization bankruptcy, since you’ll still be paying off your debts over time, you’ll have to wait four years after a discharge and two years after a layoff.

2. USDA loan

If you have filed Chapter 7 and want a loan from the United States Department of Agriculture (USDA), you will need to wait at least three years. For chapter 13, it’s one year.

3. FHA loan

If you have filed Chapter 7 and want a Federal Housing Administration (FHA) loan, you will need to wait at least two years. For Chapter 13, that’s as soon as you get a dismissal or a discharge.

4. VA loan

If you have filed Chapter 7 and want a loan from the United States Department of Veterans Affairs (VA), you will need to wait at least two years. For Chapter 13, that’s as soon as you get a dismissal or a discharge.

5. Hard money loan

Hard money lenders are typically private investors or businesses that lend money based on property, not a borrower’s credit. Hence, you should be able to get a hard money loan even after bankruptcy. However, it depends on the lender and the risk they are willing to take.

With hard money lenders, the property is weighted more heavily than your credit score. However, bankruptcy will likely affect the lending decision, even with hard money lenders. These types of lenders generally prefer to wait for your bankruptcy discharge.

A Chapter 7 bankruptcy typically takes around four to six months to discharge, while a Chapter 13 typically takes six to eight weeks after the final payment (which can take several years).

The advantage of getting a hard money loan soon after bankruptcy is that it is usually short-term or bridging loan that usually comes with interest rates and fees. high mounting. Most of the borrowers use these loans for flips since the goal is a quick exit strategy to pay off the loan.

Start saving

Whichever way you choose to finance your next real estate transaction after bankruptcy, while waiting for time to pass, you can start saving through a savings account, certificate of deposit (CD) or money market fund. When you’ve saved enough for a down payment, it’s easier to get financing.

Consider investing in REITs

There are other real estate investment options besides direct ownership. Real estate investment trusts (REITs) are companies that generally own and operate income-producing real estate. These can be apartment buildings, offices, shopping malls, hotels, hospitals, warehouses, and single family home complexes. You can buy stocks through a brokerage account.

Just because you’ve gone bankrupt doesn’t mean you can’t invest in real estate. You can. You’ve erased your slate and can now start over.


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