Buying a home right after filing for bankruptcy is probably impossible, even with a cosigner. People participating in bankruptcy must receive permission from the bankruptcy court to take on new debt, and few judges are likely to grant the permission. Having a cosigner helps for credit approval, but the bankruptcy court simply is unlikely to allow the purchase to happen at the start of the bankruptcy.
Considerations
People file for bankruptcy because they cannot handle their debts, and to immediately seek new credit for a mortgage loan is illogical. In some situations, purchasing a house is possible during bankruptcy. However, at the start of bankruptcy the court focuses on reorganizing or eliminating existing debt. Requests to take on a new mortgage or other debt are put off until later.
Lenders
Finding a lender willing to approval the mortgage loan is another obstacle -- even if the bankruptcy court were to approve the request. Traditional banks and credit unions are highly unlikely to approve a mortgage loan to someone just filing for bankruptcy, even with a strong cosigner. Loans to people in bankruptcy are not common for most banks and credit unions. However, some lenders specializing in high-risk mortgage loans may consider an application from someone just filing for bankruptcy, but their interest rates are usually exorbitant even with a cosigner.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy requires as little as three months to complete and is the fastest form of bankruptcy. The process is so quick that the bankruptcy court is unlikely to allow any new debt until the bankruptcy is discharged, or completed. Most lenders are also unlikely to approve mortgage applications during a Chapter 7 bankruptcy. Those who are comfortable making high-risk mortgage loans likely will want confirmation of debts eliminated in the Chapter 7 filing.
Chapter 13 Bankruptcy
It is possible to purchase a home during Chapter 13 bankruptcy. Chapter 13 requires three to five years to complete, and the bankruptcy court understands that people will have credit needs during the period. However, immediately after the filing the court focuses on reviewing the debtor's finances and debts as it establishes a payment plan addressing current debts.
Down Payment
Another obstacle for buying a house after filing for bankruptcy is the down payment. Someone filing for bankruptcy and needing a cosigner likely has poor credit scores, prompting all lenders to likely require at least the standard minimum 20 percent down payment. Someone with that much cash available entering bankruptcy would probably be ordered by the bankruptcy court to use the money to pay down debt instead of buying a house.
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