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Helping good people through bad times

New change for potential homebuyers who went through a hardship

For many people who have filed a bankruptcy, gone through a foreclosure or suffered some other type of financial hardship, they are typically told they must wait two to three years in order to able to try and purchase another home. These people are then forced to pay rent or find some alternative housing arrangement during that time. However, a new program from the government may shorten that time to a year.

The program from the Federal Housing Administration will now allow homeowners to attempt to purchase a new home in as little as 12 months after a bankruptcy, foreclosure or some other financial hardship. This is through the FHA loan process and the program makes significant changes to many of the rules.

The way to get a shorter wait time is to show that the financial challenges stemmed from a "recession-related financial event" and that the potential purchaser has experienced significant debt relief, suffered no further setbacks and has maintained good credit for the last 12 months. Further, the potential purchaser must also go through the housing counseling process. These new guidelines are for anyone who has recently recovered and will extend through September 30, 2016.

Trying to deal with significant debt is no easy task. Whether it was from medical bills, credit cards or loss of income, debt can pile up very fast. For many people, one of the only ways to be sure that the debt is dealt with is to file for a consumer bankruptcy. One of the greatest stigmas with bankruptcy is how it could stop the debtor from trying to get a new home at some point in the future. But it appears this stigma should be given much less weight than before with the new FHA program. The best way to gain a full understanding of the process and options available is to seek out advice from a reputable source. That way, the financial challenges can be dealt with in as straightforward a manner as possible.

A fresh start does not have to be a pipe dream. With the proper assistance, the process to getting that fresh start can begin very quickly.

Source: Atlanta Daily World, "Credit Card Debt Drops to $850 Billion," Charlene Crowell, August 26, 2013

Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-624-4002
Toll Free: 800-257-7594
Fax: 423-624-0509
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