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If I File Bankruptcy Will I Be Able to Get a VA Loan or Mortgage Again? – Mike

By on June 23, 2012
If I File Bankruptcy Will I Be Able to Get a VA Loan or Mortgage Again? – Mike

“Dear Steve,

Hello I am an unemployed male with some income whom is facing divorce with no children. I am considering a bankruptcy to sever things but I have a VA mortgage and cant get the house sold. When I move out I want to retain my VA benefits. I understand that if I have to file bankruptcy I will lose the VA Benefits.

What will my wife have (need) to do to keep the house If I file bankruptcy. I know that a VA loan requires the VA Benefits recipient to occupy the property. I want to force her to get her own financing and off my loan. Can I do that?

Mike”

Dear Mike,

Here is what the VA has to say about bankruptcy and the VA loan:

Q: Can I get a VA loan if I have had a bankruptcy in the last few years?

A: The fact you and/or your spouse have been adjudicated bankrupt does not in itself disqualify you for a VA home loan. The following rules apply:

  • If the bankruptcy was discharged more than 2 years ago, it may be disregarded
  • If the bankruptcy was discharged within the last 1 to 2 years, it is probably not possible to determine that you and/or your spouse are a satisfactory credit risk unless both of the following requirements are met:
    • you and/or your spouse have reestablished satisfactory credit, and
    • the bankruptcy was caused by circumstances beyond your and/or your spouses control (such as unemployment, medical bills, etc.)
  • If the bankruptcy was discharged within the past 12 months, it will not generally be possible to determine that you and/or your spouse are satisfactory credit risks. – Source

So it appears that if you file a chapter 7 bankruptcy and get straight to work to rebuild your credit you will become eligible for a new VA loan not that far into the future. You can follow this free guide to rebuild your credit after bankruptcy.

You can click here to find a local bankruptcy attorney to discuss your situation with so you can make an educated decision if bankruptcy is right for you.

Please post your responses and follow-up messages to me on this in the comments section below.

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READ  5 Steps to Getting a VA Loan

About Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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