When individuals in New Jersey or other parts of the U.S. file for bankruptcy, they can benefit from a fresh financial start. However, bankruptcy can also hurt a person’s credit, which can make it hard to apply for a mortgage in the future. Fortunately, there are a few ways a former bankruptcy filer can improve his or her chances of qualifying for a mortgage.

There are two common types of bankruptcy: Chapter 7 and Chapter 13. Although the terms of each type of bankruptcy are different, both can have a negative impact on credit because each type can remain on a person’s credit history for seven to ten years. A mortgage lender may be able to see that an applicant had difficulties managing debts at one time and may be concerned that history will repeat itself in the future.

The good news is that bankruptcy filers won’t be prohibited indefinitely from qualifying for mortgages later on. After a certain number of years, they may be able to apply for mortgages and be approved as long as they meet specific qualifications. Applicants are encouraged to meet the waiting period rule that pertains to the type of bankruptcy they filed for. They should also demonstrate that they’ve worked to repair their credit scores. Many conventional mortgages require a credit score of at least 620. On the other hand, many FHA loans may require lower credit scores and down payments as compared to conventional mortgages.

Bankruptcy laws are complex, and individuals who have filed for bankruptcy may need guidance about what steps they can take to rebuild credit afterwards. For applicants who are looking to bounce back after filing for bankruptcy, an experienced bankruptcy attorney may be able to assist.