A bankruptcy has a devastating effect on your finances. It almost immediately shuts down your ability to borrow any money whatsoever. It can take months or even years before you’re able to really start building your credit back up. This makes it next to impossible to get a home loan in the days following your bankruptcy.

The good news is that, if you’re smart about how you handle your finances and if you make the right moves, you may be able to buy a home within 18 to 24 months after your bankruptcy is settled.

That’s the first thing to realize, by the way; if your bankruptcy hasn’t yet been decided, you aren’t going to get any credit at all. That’s really your first step: get the bankruptcy discharged first.

Here are the things you can do following bankruptcy to get ready to qualify for a home loan and buy a new home:

• Get your credit report straightened out. After your bankruptcy, you know exactly which obligations still exist and which don’t. If the credit reporting agency leaves a debt on that has been discharged, you need to contact the credit reporting agency and get them to fix it.
• Start building new credit. The fastest way to get going again is to prove to creditors and lenders that you will pay back your loans. You can do this with a couple of different tools, including a secured credit card and installment loans. Make sure you understand the terms of those kinds of activities before you do them, however.
• Only use a small portion of your credit. Don’t max out your credit cards. Don’t apply for too much credit at once. Build your credit in a smart way, and you’ll be that much further ahead.
• Make sure you don’t have any tax liens. If you want an FHA home loan, you need to have arrangements with the IRS in place.
• Consider buying a home on land contract. If you can find someone willing to sell you a home on contract, consider going that route. It won’t help rebuild your credit score right away, but it will get you into a home.

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