Chapter 7 bankruptcy, also known as a “liquidation” bankruptcy, is a type of bankruptcy in which a debtor’s assets are sold to pay off creditors. In a Chapter 7 bankruptcy, the debtor is typically allowed to keep certain exemptions, such as a primary residence, a vehicle, and personal property, but other assets may be sold to pay off creditors. Once the assets have been sold and the creditors have been paid, the debtor is discharged from the remaining debt.
The length of time it takes to qualify for a mortgage after a Chapter 7 bankruptcy is typically 2-4 years. Lenders will want to see that the borrower has re-established credit and has a stable income.
However, some lenders may offer a mortgage loan to a borrower that has filed for a Chapter 7 bankruptcy, as soon as they have received a discharge.
It’s important to note that bankruptcy laws vary by state and it’s best to check with a local attorney or housing counselor to get a better understanding of the laws in your state.