After you receive a bankruptcy discharge, you have no more debt. It is not unusual for a debtor to want to purchase a home after filing bankruptcy. As an Arizona bankruptcy lawyer and an Arizona real estate lawyer, there are two main factors in a debtor’s ability to qualify for a home mortgage:  (a) how much savings the debtor has; and (b) the debtor’s credit score.

Downpayment

Most lenders will require some downpayment, particularly from those who have recently filed bankruptcy. It is best to be able to put down at least 20%. Start saving immediately after filing bankruptcy in order to make the downpayment. You may have to slash some living expenses, like cell phone and cable charges, dining out, and other luxury expenses. The larger the downpayment, the better chance you will qualify for decent financing.

Credit

It is no secret that bankruptcy will adversely impact your credit. Your credit score will be reduced about 120 – 160 points right after filing bankruptcy. As a result, you should start rebuilding your credit as soon as possible after filing bankruptcy. The best way to do this is to pay your debts in a timely manner so that your creditors will report to the credit bureaus your timely payments. Make your student loan payments. Make your car payments. If you can reaffirm your car loan while you are in bankruptcy, this will also help rehabilitate your credit because the car lender will report your payments to the credit bureaus. That being said, reaffirming a car loan is sometimes a very bad idea.

Make sure to periodically check your credit reports. If a car lender is not reporting your payments (probably because you didn’t reaffirm the car loan during the bankruptcy), you can solve this by filing a dispute with the credit bureaus and submitting proof of your payments.

If you get a credit card after filing bankruptcy, use it, but make sure to pay it off in its entirety over a 2 – 3 month period. This will help your credit score.

The bottom line is that you can buy a home after you file bankruptcy, but you have to be smart about it. A debtor must always keep in mind the perils they found themselves in that required them to file bankruptcy in the first place. Be patient. Save money, timely pay your bills, and you will eventually find yourself in a position to buy a home again.