Reader’s Question

I am trying to pre-qualify for a home mortgage loan. 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

You’re better off attempting to remove the bankruptcy from your credit report. You can read how to remove a bankruptcy here.

For a bankruptcy explanation letter you have it spot on –be honest and explain your situation at the time. Explain, in some detail, your hardships and I would even end the letter with a few brief ways in which your financial behavior has changed.