There is a difference in the type of Bankruptcy one person may have entered into compared to the next,
and if you were in a Chapter 13 BK rather than the Chapter 7 variety, you might find that the guidelines to buy a home after BK is easier. In 2008 Fannie Mae released guidelines stating the time after discharge that one must be re-established into a good credit history before they can get a loan to buy a house.
In Chapter 13, the program works more like a payment plan. The website TotalBankruptcy.com does a great job of distinguishing the difference between the two. Regarding the Chapter 13, they said, “You’ll make one monthly payment to the bankruptcy trustee for distribution—you’ll have no direct contact with creditors during the protection period of 3-5 years”. This is a very basic, to the point, example of how Chapter 13 works. After a Chapter 13 BK, assume the hopeful buyer completed the program successfully, the buyer may only need 2 years of re-establishing a good credit before Fannie Mae and the lending industry will welcome them back into a mortgage.
Chapter 7 is a much more aggressive, version of Bankruptcy, and Fannie may will likely require re-established positive credit for much longer before they will “bless” a home buyer for loan approval on a home again…4-7 years at minimum depending on the results of the program. In Chapter 7, the BK recipient’s credit world is ultimately washed clean. All revolving debt, many times the mortgage, and car loans, are all ‘forgiven’ and taken away from the person. For full explanation from the “horse’s mouth”, visit FannieMae.com.
Results and guidelines from one person to the next may differ slightly, so see your mortgage consultant for the specifics.