According to the US Court website, more than 430,000 people filed for bankruptcy last year. The decision to do so brings many emotions along with it: shame, embarrassment, depression, anger. It also affects your finances for several years afterward. If you want to buy a Lake Havasu home, how does it affect your chances? Will you ever be able to buy one again?

How Bankruptcy Affects a Home Buyer

Will I Ever Be Able to Buy a Home?

First, let's answer the big question. Will you ever be able to buy another home again? Short answer? Yes. It takes a little time and some discipline. But you can become a homeowner down the road.

How Long Do I Need to Wait?

Typically, it takes anywhere from seven to ten years for a bankruptcy to come off your credit report after a discharge. A discharge is when the court officially releases you from responsibility for the debt included in your filing. Fortunately, you don't usually have to wait that long before you are considered creditworthy enough to banks to buy a home. However, you must take control of your finances right away.

The amount of time required to wait also depends on the type of bankruptcy you choose: Chapter 7, Chapter 11, or Chapter 13. Chapter 7 requires you to liquidate all assets to pay off as much of your debt as possible. The rest then gets dismissed. With Chapter 11, a repayment plan is put into place. Finally, Chapter 13 also includes a repayment plan but typically works with people who have a steady income to help pay off debts.

What to Do After Bankruptcy

After your discharge, start rebuilding your credit with a secured credit card (one that requires you to deposit money in a dedicated bank account) or a small installment loan. Make sure to make all payments on time. Pay off the entire debt as quickly as possible. Then, monitor your credit. Make sure that the debts discharged actually come off your report. Finally, put money in your savings account each month. It can take anywhere from one to four years of good credit history to bring your score up enough that the bankruptcy no longer affects your chances for mortgage approval. Usually, two years allows an adequate enough time to build up your credit and your savings account to appropriate levels for mortgage companies to consider you a good risk. Again, though, that takes discipline and dedication to your finances.

Before you file, talk to a bankruptcy attorney, credit counseling service, and your bank/creditors. You may be able to work out a deal to avoid it altogether. That still may delay your home buying goal a bit. But it is definitely better to avoid bankruptcy altogether if possible.

Sunstone Real Estate Group at Coldwell Banker Realty, Lake Havasu City, AZ