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Can I Purchase a Home after filing Bankruptcy?

The answer to this question, is the too frequent legal answer, “It Depends.” Credit scores a/k/a FICO scores and interest rates are in an inverse relationship, meaning, the higher the credit score, the lower the interest rate. Our credit scores are the lead factor in determining the cost of credit, whether for a mortgage, automobile loan, personal loan, credit card, etc. Therefore, to pay the least amount possible in the form of an interest rate, it is most important to maintain a strong credit score, especially in our current tightened credit market. It is also important to note that credit scores are like roller coasters, they go down far quicker then they go up.

A credit history of late or missed payments or a high outstanding amount of debt will all cause a credit score to drop. In addition to the credit history a relatively high amount of outstanding debt relative to one’s income will cause a credit score to fall as well. Bankruptcy fits in to the credit score equation in that it gives one a chance to rebuild or achieve a fresh financial start. Bankruptcy is not a quick fix rather a tool to help one get back on financial track. When a bankruptcy is filed a credit score gets a fresh start, meaning the credit report rather than reflecting the old credit history will reflect the current and ongoing financial situation post-bankruptcy filing. If no new debt is incurred post bankruptcy thus improving the consumers debt to income ratio, the credit score will rise accordingly. With careful planning and allocating savings toward a down payment it is possible to purchase a home one year after a bankruptcy filing.

To speak with one of our lawyers regarding your financial situation and to determine if Bankruptcy Law is right for you, please contact one of our conveniently located law offices listed below.

CENTER CITY PHILADELPHIA: 1315 Walnut Street, #302 Phila., PA 19107 215-545-0008
NORTHEAST PHILADELPHIA: 2375 Woodward Street, #105 Phila., PA 19115 215-545-0008
DELAWARE COUNTY OFFICE: 1515 Wallingford Road, #218, Springfield, PA 19064 610-432-3111