If you served in the armed forces, you know that the G.I. Bill gives you some specific benefits. Included is the option to apply for a VA loan. You can then use this to buy a home; it’s a way of helping soldiers integrate themselves back into civilian life.
For many vets, though, bankruptcy is a serious issue. Civilians and vets have similar bankruptcy rates every year. If you are facing bankruptcy, you may be hesitant to file because you’re not sure what impact it’s going to have on your VA benefits.
If so, there’s good news. You are still eligible to apply for a VA loan, even if you use Chapter 7 bankruptcy in New York. This filing does not revoke your benefits and eligibility in any way. As a former member of the armed forces, the G.I. Bill will always apply to you, finances aside.
However, that doesn’t mean filing for bankruptcy has no impact on your financial situation at all. You may have to wait through a “seasoning period” after you file. Only after this is over can you apply for the loan. With Chapter 7 bankruptcy, the typical seasoning period that is imposed is two years.
This isn’t always as bad as it sounds. Remember, bankruptcy still impacts your credit score, and the G.I. Bill doesn’t grant you an automatic VA loan. You still want to build up your credit score and put yourself in good standing before you apply. You can use the seasoning period to do just that and put in a strong application when it ends.
Any time you use Chapter 7 bankruptcy, make sure you know how it impacts your financial options before you file.
Source: The Mortgage Reports, “Buy A Home With A VA Loan After Bankruptcy,” Chris Birk, Nov. 02, 2015