Military service offers many challenges, and one of those is finances. But if you’ve been forced to declare bankruptcy, that doesn’t mean you can’t get a VA mortgage at some point. Mortgages backed by the Department of Veterans Affairs are one of the benefits you earned through your service, and while bankruptcy can delay you from using that benefit, it shouldn’t stop you forever.

Bankruptcy filings declined substantially in 2014. Non-business bankruptcy filings totaled 909,812, down from 1,038,720 in 2013. That’s good news, but there’s still a lot of people filing for bankruptcy protection. If you’re one of them, the most immediate problem is the blow to your credit score. Your credit score is the most important component in getting approved for a VA loan, and a low score is going to affect your ability to get financing.

Time heals your credit

The most common types of bankruptcy are called Chapter 7 and Chapter 13, named for the portion of the United States Code that defines them. Chapter 7 is often referred to as liquidation because the bankruptcy trustee can take and sell some or all of your property to pay back some of your debt. Chapter 13 is sometimes called “wage earner” bankruptcy because you must have a reliable source of income and you’ll follow a repayment plan that lasts up to five years.

With a Chapter 7 bankruptcy, most VA lenders will want to wait at least two years after your debts are discharged. That’s an important point – it’s not two years from the filing date, but from the discharge date. In general, that’s good for you – you’ll need the time to rebuild your credit. So make all payments on time, and focus on creating a stable financial profile.

Veterans who file for Chapter 13 bankruptcy protection may be eligible for a VA loan as soon as 12 months after their filing date. Of course, good credit and no late payments during that period are crucial. You may also need to secure permission from your bankruptcy trustee to take on new monthly payments.

Get some direction

If you have declared bankruptcy and want to get back on track to take advantage of your VA loan benefit, a qualified loan professional can help you create a plan to repair your credit and qualify for a VA loan. At Embrace Home Loans, you’ll find experts in the mortgage industry with years of experience in working with VA lenders. Contact us at 407-733-6425 for more information about VA mortgages and bankruptcy.