The fact that a Florida bankruptcy exists in an applicant’s (or spouse’s) credit history does not in itself disqualify for a Florida VA home loan. Develop complete information on the facts and circumstances of the Florida bankruptcy. And, consider the reasons for the bankruptcy and the type of Florida VA bankruptcy filing.
Conforming Balance: A bankruptcy may be disregarded if discharged more than two years ago.
Jumbo: There may be no history of any bankruptcy in the last 7 years.
If the bankruptcy was discharged within the last one to two years, it is probably not possible to determine that the
applicant or spouse is a satisfactory credit risk unless both of the following requirements are met:
The applicant or spouse has obtained consumer items on credit subsequent to the bankruptcy and has
satisfactorily made the payments over a continued period. AND
The bankruptcy was caused by circumstances beyond the control of the applicant or spouse such as
unemployment, prolonged strikes, medical bills not covered by insurance, and so on, and the circumstances
Divorce is not generally viewed as beyond the control of the borrower and/or spouse.
If the bankruptcy was caused by failure of the business of a self-employed applicant, it may be possible to determine
that the applicant is a satisfactory credit risk if:
The applicant obtained a permanent position after the business failed.
There is no derogatory credit information prior to self-employment.
There is no derogatory credit information subsequent to the bankruptcy, AND
Failure of the business was not due to the applicant’s misconduct.
If a borrower or spouse has been discharged in bankruptcy within the past 12 months, it will not generally be possible to
determine that the borrower or spouse is a satisfactory credit risk.