There are many benefits to filing for bankruptcy, such as the ability to eliminate (Chapter 7) or reorganize (Chapter 13) your debt. However, you don’t want to proceed until you compare both the pros and cons, as this will allow you to best plan for the future.

Getting a mortgage after bankruptcy may not be easy, but it’s not out of the question. The first thing you need to know is that you must let the “waiting period” pass.

For example, if you’re interested in a conventional mortgage, here’s a breakdown of the waiting period:

  • Chapter 7: four years
  • Chapter 11: four years
  • Chapter 13: four years from the dismissal date or two years from discharge

With Chapter 7 bankruptcy, for example, the waiting period clock begins to tick once the bankruptcy is discharged. While four years sounds like a long time, you can spend it getting your finances in order and improving your credit score. This will put you in the best possible position to apply for a mortgage when you’re eligible to do so.

Should you wait longer?

You don’t have to apply for a mortgage the day that you’re eligible. It may benefit you to wait. For example, a Chapter 13 bankruptcy is removed from your credit report after seven years. It’s often best for this red mark to be removed before seeking a loan.

The key to success with bankruptcy is to understand the pros and cons, as well as the impact the filing will have on your finances now and in the years to come.