I am trying to pre-qualify for a home mortgage loan, and I filed a chapter 7 bankruptcy back in 2001. The underwriter wants a letter to explain the bankruptcy, what is the best way to write it?  Some say to write hardship due to job loss, but will this help or hurt my circumstance?  What exactly are they looking for?

Response

It is best to be honest in your bankruptcy explanation letter, and thoroughly explain your situation at the time.  Explain, in some detail, your hardships and even end the letter with a few brief ways in which your financial behavior has changed for the better since your bankruptcy.