NEW YORK, February 10, 2023 (Newswire.com) - iQuanti: In 2023, filing for bankruptcy can look a lot different than it did a few years ago. With the rise of new technologies, buying a home after bankruptcy is becoming more accessible than ever before. Thanks to online tools and services, gone are the days when filing for bankruptcy was synonymous with being stuck with poor credit and permanent financial insecurity. Credit-scoring algorithms have become more sophisticated, recognizing that people should be able to rebuild their credit after challenging economic times. That means buying a home after bankruptcy is doable in 2023—but only if you take the time to understand your individual situation and follow prudent money habits. So if you're looking to make a major purchase like buying a house again, don't worry; it's totally possible—even after dealing with bankruptcy in 2023. 

Here are some steps you should take to buy a home after bankruptcy. 

Step 1: Improve your credit score

Improving your credit score after bankruptcy gets tricky as the bankruptcy typically won't be removed from your report until six to seven years after. However, instead of waiting for it to fall off, take steps to get your score back to a competitive level. 

The two most significant factors affecting your credit score are your number of on-time payments and your credit utilization.

How can you work on these? Start with a secured credit card or focus on any outstanding loans that weren't absolved by a bankruptcy (like student loans, for example). A secure credit card works a little differently than a regular credit card. You deposit money into it, then you "borrow" against it when you make a purchase, which lowers your available credit.

For example, if you have a secured credit card with a $300 available balance, you've most likely had to give them a deposit of $300 to activate the account. If you make a $50 purchase with that card, your available credit will be $250, and you must pay back the $50 to get back to $300 and not accrue interest. Once you close the card, your $300 will be returned to you in a few weeks.

Secured cards are a great way to show you're making positive changes to how you handle credit and can help boost your score quickly.

Step 2: Sell off any valuable assets

One of the biggest mistakes people make after declaring bankruptcy is they don't liquidate their assets as quickly as possible. Selling off high-value items (like cars, furniture, and electronics) can help you get your finances back on track and free up some cash to start rebuilding your credit score.

However, don't jump to selling off appreciating assets yet if you can avoid it. These assets have values that improve over time and can come in handy later should you need them for a down payment on your new home.

Instead, start small by selling depreciating items you don't use or need. This can help you save money to put down on a home quickly and without incurring too much debt.

Step 3: Look for government assistance

Even if you don't qualify for a loan or credit card through traditional channels, there are still options available to you. For instance, the government provides low-interest loans for people who are struggling financially.

You can also look into programs like the Home Affordable Modification Program (HAMP) or the New Homeowner's Assistance Program (NHAP).

These programs provide you with a loan modification to help lower your monthly payments and, in some cases, provide you with a grant that can be used towards a down payment or closing costs.

The bottom line

Don't give up hope just because you've declared bankruptcy; there are plenty of ways to get your finances back on track and become a homeowner again. The sooner you begin, the faster you'll see improvements to your financial health that make you a more attractive candidate for a mortgage, so don't wait!