Damaged Credit

Can You Get A VA Loan After Bankruptcy?


If you've just filed for bankruptcy, it's time to stop stressing and start planning. You can still get approved for a VA home loan! Many veterans who have completed Chapter 7 or Chapter 13 bankruptcy filings can purchase homes—and do so without complications.

You CAN Get A VA Loan After Bankruptcy

VA loans are available to veterans and active duty service members. These loans can be used to buy a home, refinance an existing home loan, or build a house. VA loans are backed by the US government and have low down payments and lower closing costs than conventional mortgages.

There are, however, different requirements based on the type of bankruptcy you file. 

When you file for bankruptcy, you will opt for either Chapter 7 or Chapter 13 bankruptcy in most cases. 

You Can Qualify For A VA Loan Even After Completing A Chapter 7 Bankruptcy

In Chapter 7 bankruptcy, debtors can sell their property to pay off their debts. Once the sale of assets is final, the remaining debts are discharged, allowing them to start over with a clean slate. There are several drawbacks to Chapter 7, however, including 

  • Losing property (such as cars and real estate)
  • You can’t catch up on payments to keep assets 
  • Bankruptcy stays on your credit report for up to 10 years 

To get a VA loan after filing Chapter 7 bankruptcy, you must meet the following criteria:

  • Minimum of 2 years since debt discharge
  • No late payments or new accounts in collections in the most recent 12 months since discharge

To get trustee approval from the court, you must prove that your finances are stable enough to qualify for a home loan using a prescribed amount of money that includes all monthly debt payments or minimums (such as car loans or student loans). Trustee approval will be granted if those requirements are met at the end of two years after your bankruptcy filing date.

You Can Qualify For A VA Loan Even After Completing A Chapter 13 Bankruptcy

Unlike Chapter 7, Chapter 13 bankruptcy allows individuals to work out a repayment plan to keep their assets. An attorney works with the court on a debt repayment plan. The debtor pays on the repayment plan, and any remaining debt is discharged, typically after 3 – 5 years.

This type of bankruptcy typically falls off your credit report in 7 years.

Those seeking a VA loan after Chapter 13 are in a far better position than Chapter 7 filers as:

  • There is only a 12-month minimum wait after the bankruptcy filing versus two years
  • You can qualify for a VA loan while in a Chapter 13 bankruptcy if you can show 12 months of on time payments in the bankruptcy.

However, any new debts must be approved by the court or appointed trustee in the bankruptcy proceeding.

To apply for a VA loan after filing Chapter 13 must have: 

  • On-time payments in the debt repayment plan and no accounts in collections
  • No other late payments on any other accounts
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Even if you filed for bankruptcy, you can still get approved for a VA loan and buy your dream home. However, some rules need to be followed to qualify.

First, it's essential to understand what happens when someone files for bankruptcy. A person's credit score will take a hit after filing for bankruptcy protection because it shows up on their credit report as an adverse event.

After one to two years have passed since your last discharge date (the day you became debt-free), you're free to apply for another loan, such as VA mortgages, again!

Speaking with a VA loan expert is a good idea before you file for bankruptcy. They can help you determine if this option suits your situation and what steps are necessary to keep your credit score up after filing. If you decide to pursue a bankruptcy as an option to get out of debt more quickly, then some things need to be taken care of before applying for a home loan after bankruptcy.

Learn more about our VA loans here.