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Writing a Bankruptcy Explanation Letter

28 February 2009 3 Comments


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?


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.


  • Felicia said:

    We filed Chapter 13 in 2001, two credit reporting agencies have removed it from our credit report. What terminology do you use, when asking a reporting agency to remove the listing. I know they have the right to show it listed for 10 years, but they will remove it if you ask.

  • Credit Expert (author) said:

    Hi Felicia, the letter is more for any lenders you may encounter when a bankruptcy is still showing on one of your credit reports. Good job on getting the bankruptcy removed from two credit reports. You may find this article helpful in getting it removed from the third: http://www.fightcredit.com/how-to-remove-a-judgement-from-credit-report/

  • N. D. Hamm said:

    I’m also as the first indiviual, trying to pre-qualify for a home mortgage loan, and I filed a chapter 7 bankruptcy back in 2007. The underwriter wanted a letter to explain the bankruptcy and I gave it to her. My conditions were; I started a job with DOD, just finishing off orders with the military. An old debt attacked me from almost 19 years ago. Basically, I was in college and picked got approve for a credit card. The collection agency started the garnish my pay check at 25% of my earnings. In the past, it was just me. Now, I’m married (spouse is a homemaker) with 3 children. The debt accummulated from $2,600.00 to over $19,000.00. I made over 1,400.00 after taxes. We just signed on to a lease of a lesser rent then the last apartment. It seems what I given the underwriter isn’t acceptable to the lender. Is there a better way of writing it?

    Thanks for whatever suggestion(s) you may have.


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