If you are certain that you will be filing Chapter 7 bankruptcy at some point in the next few months and do not currently own a house, you might be trying to figure out whether you should buy one now or wait to buy one until after you file for bankruptcy. While there is no set answer for this, as every situation is different, here are some factors you should consider as you try to decide when to buy a house.
Buying before may offer some advantages
With Chapter 7 bankruptcy, a person is often able to keep the house they own even throughout the bankruptcy filing. There are rules for this, though, and the main rule to understand is that you can keep your house if you do not have a lot of equity in it. If you have a lot of equity, you may lose the house, as the court will want to sell it to raise cash to pay off your creditors. If you choose to buy a house before you file for bankruptcy, you could remain a homeowner throughout your case, and you would not have to worry about the challenges of qualifying for a mortgage loan with a bankruptcy ruling on your credit report. This is the main advantage you will have if you choose to buy a house first.
Buying a house afterward might be better in some situations
Buying a house after filing can also be the better option in some cases, but it typically is not the better choice. The only reason you may want to wait to buy a house is if you are afraid you would not be able to afford the payments on it. If you bought the house and could not afford it and then filed for bankruptcy, you could end up losing the house and then not having the ability to file again for bankruptcy.
One other thing to consider is that if you currently have bad credit before you file for bankruptcy, you might have trouble getting approved for a loan to buy a house. If you file for bankruptcy and wait just a couple of years, your credit might actually be really good, which means you could qualify for a much better interest rate.
It is always a good idea to discuss your questions with a bankruptcy lawyer to find out advice from a legal expert before you make any big decisions. To do this, schedule an appointment with a bankruptcy lawyer like Greg Dunn Bankruptcy Attorney.