Does bankruptcy make home ownership impossible?

Declaring bankruptcy may tough to handle, but it doesn't entirely make home ownership impossible, a report from the Financial Post suggests.

“It may sound counter-intuitive, but for some people filing a bankruptcy or a consumer proposal may be the quickest way (to home ownership),” says bankruptcy trustee Andy Fisher of A. Farber & Partners Inc. “There are people who are carrying a lot of unsecured debt where it is difficult to carry that debt and save money to buy that house.”

But this doesn’t necessarily mean that the dream of home ownership is over. If the prospective homebuyers file a consumer proposal or declare bankruptcy, it allows them to immediately reduce those debts and develop some sort of payment plan.

When the time comes to buy a house, your credit rating factors into whether or not your bank will give you a loan. Bankruptcy will most likely not help that cause, but lenders will also take into consideration what your down payment is relative to the value of the house and what you are currently earning at your job.