Question

Jon,

I foolishly went bankrupt 7 years ago due to running up a huge amount of credit card debt. My bankruptcy was discharged, and I have been good with credit ever since. I am applying for a mortgage to buy my first home and the application has a question asking have you ever been bankrupt?

My question is this, the bankruptcy was 7 years ago and has been removed from my credit report. How would the mortgage company know anything if I just answered no.

R

Answer

R,

You ask a good question, and the decision as how to answer the question is up to you.

The question, “have you ever been bankrupt?”, is a very broad question. It does not give a time reference, such as in the past 6 years, and it does not give a region or country reference.

As your bankruptcy is no longer on your credit file, if a credit check is done for the loan, and it will be done, the bankruptcy may very well not show on your credit report.

Disclosing the bankruptcy can mean the lender will look further into matters, not disclosing it could have other implications. Should the lender some how find out about the bankruptcy, and you have answered no, on the application. This could be viewed in not a good light.

As to how the lender may find out, I am unsure, and who knows.

I would like to think a bankruptcy from 7 years ago, and depending on the amount of your deposit, and your current financial situation, would secure you the mortgage.

Sorry I cannot advise more directly.

Regards,

Jon

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