A bankruptcy does not disqualify you from a DSCR loan on an investment property. It starts a clock. Under The Fiirm's DSCR program, a Chapter 7, Chapter 11 or Chapter 13 bankruptcy is a significant derogatory credit event when it falls within the past 36 months, and the 36 months are measured from the date of discharge or the date of dismissal — not from the date you filed.
That last clause is where most of the confusion lives. Borrowers routinely tell us they filed four years ago and assume they are clear. If the case discharged eighteen months ago, they are eighteen months into a three-year wait, not four years past it. The filing date does not start the clock. The resolution date does.
This page covers how each chapter is treated, which date governs, what a dismissed case does, how multiple filings interact with the lookback, and exactly what has to be in the file. It is written for the 1-4 unit investor program, where the loan is underwritten to the property's rent coverage and the guarantor's credit is a gate rather than the source of repayment.
The rule in one table
| Chapter | Waiting period | Measured from |
|---|---|---|
| Chapter 7 | 36 months (3 years) | Date of discharge or date of dismissal |
| Chapter 11 | 36 months (3 years) | Date of discharge or date of dismissal |
| Chapter 13 | 36 months (3 years) | Date of discharge |
| Chapter 13 (dismissed) | 36 months (3 years) | Date of dismissal |
Read the table twice, because the useful finding is what is not there. There is no chapter that gets a shorter period. There is no discount for a Chapter 13 that ran its full plan. There is no longer penalty for a dismissal. Every path out of a bankruptcy case leads to the same three-year seasoning requirement on this program.
Do not import the residential-mortgage conventions
If you have financed a primary residence after a bankruptcy, or read a broker's summary written for agency loans, you have probably absorbed a different set of numbers: two years from a Chapter 13 discharge, four years from a Chapter 7 discharge, four years from a dismissal, a separate multiple-filings penalty. Those conventions come from conforming residential underwriting. They are not what this program says.
This is a business-purpose loan on an investment property, underwritten manually, against its own credit matrix. The matrix sets one period — 36 months — and applies it to all three chapters. It does not lengthen the period because the case was dismissed rather than discharged, and it does not shorten the period because you completed a repayment plan.
The practical consequence runs both ways. A borrower whose Chapter 7 discharged 40 months ago is outside the lookback here even though a conforming lender would still be counting. A borrower whose Chapter 13 discharged 26 months ago clears an agency test and does not clear this one. Do not carry an answer across from one program to the other, in either direction.
Filing, discharge, dismissal: three different dates
These three words describe three separate events, often years apart, and mixing them up is the single most common reason a borrower miscalculates eligibility.
Filing is the day the petition hits the court. It is the date that shows most prominently in conversation and memory, and it is the date that does not matter for this rule.
Discharge is the court order releasing you from personal liability on the debts the case covers. In a Chapter 7 it typically follows the filing by months. In a Chapter 13 it follows the completion of a multi-year repayment plan, so the gap between filing and discharge can be substantial. Discharge means the case ran to its intended conclusion.
Dismissal is the case ending without a discharge. A case can be dismissed voluntarily, or by the court for missed plan payments, missed filings, or failure to meet other requirements. The debts are not discharged and creditors are free to resume collection.
For every chapter on this program, the clock runs from discharge or dismissal — whichever one actually happened in your case. A case has one or the other, not both.
Chapter 7
Chapter 7 is a liquidation. Non-exempt assets are administered by a trustee, qualifying unsecured debts are discharged, and the case usually closes within months of filing. Because the filing-to-discharge gap is short, borrowers who went through a Chapter 7 are the group least likely to be caught out by the measuring-date rule — but they are also the group most likely to guess at the exact date, because the case ended quickly and undramatically.
Guess wrong by a month in the wrong direction and the file is ineligible on submission. Order the discharge order. Do not rely on the credit report's date, and do not rely on memory.
Chapter 11
Chapter 11 is a reorganization, most commonly used by businesses but available to individuals, and cases can run for years. The program treats it exactly as it treats Chapter 7: 36 months from discharge or dismissal.
Two things are worth flagging for investors specifically. First, if the entity that filed was a business you control rather than you personally, whether the event lands on this file depends on whose credit is being examined — and on this program every individual with a 25% or greater direct or indirect interest in the borrowing entity supplies a tri-merged credit report and signs a guaranty. A bankruptcy sitting on any one of those individuals is in scope. Second, an individual Chapter 11 that has been confirmed but not yet discharged has no discharge date and no dismissal date. The guideline does not address the confirmed-but-undischarged case, so treat it as a question to raise before you order an appraisal rather than an answer you can look up.
Chapter 13
Chapter 13 is the reorganization for individuals with regular income: a court-approved plan, typically three to five years of payments to a trustee, then a discharge if the plan is completed.
The guideline states the Chapter 13 rule as two prongs — 36 months from the date of discharge, or 36 months from the date of dismissal — and both prongs are the same length. This is the point at which borrowers most often arrive with the wrong number, because the residential convention they have read treats a completed Chapter 13 far more generously than a dismissed one. Here they are identical.
Work the arithmetic honestly. A five-year plan filed in early 2019 and discharged in early 2024 puts the borrower roughly 19 months into a 36-month wait as of today. The plan payments were real, they were made, and they earn nothing under this rule. The wait ends 36 months after the discharge date.
What a dismissal does
A dismissal is not a lesser event on this program and it is not a worse one. It is the same 36-month clock, started on the dismissal date.
That is a genuinely different answer from what most borrowers expect, and it cuts both ways.
The favourable reading: a borrower who filed, could not sustain the plan, and had the case dismissed two years into it is not penalised with a longer waiting period for having failed to complete. The dismissal date starts the clock, and 36 months later the event is outside the lookback.
The unfavourable reading: a borrower who filed and voluntarily dismissed quickly — sometimes to stop a foreclosure sale, sometimes on advice, sometimes because circumstances changed — cannot argue the case "didn't count." It counts. The dismissal date is the measuring date, and the full 36 months run from it.
There is a second consequence that catches people. A dismissal leaves the underlying debts alive. Discharge wipes personal liability; dismissal does not. So a dismissed case can leave behind judgments, tax liens, charge-offs and past-due accounts that a discharge would have cleared — and those have their own requirements on this program, separate from the bankruptcy clock. They must be satisfied or brought current prior to or at closing.
Multiple filings
The guideline does not set a separate rule for borrowers with more than one bankruptcy. There is no "two filings in seven years" provision in this matrix, and we are not going to invent one for you.
What the text does is define the event by its resolution date and apply a 36-month lookback to it. Read plainly, that means each case is measured by its own discharge or dismissal date, and a borrower is inside the lookback if any of those dates falls within the past 36 months. A 2016 Chapter 7 and a 2024 Chapter 13 dismissal are not averaged; the 2024 date is the one that governs, because it is the one inside the window.
Beyond that mechanical reading, be aware of two things. This program requires a manual underwrite on every file, so a pattern of repeat filings is visible to a human being who is reading the whole credit picture, not just running dates against a matrix. And the program permits single-loan variances to eligibility in some cases where strong compensating factors exist — that is a discretionary approval that sits above the file, not something you can count on, and the guideline's hedging on it is deliberate.
The documentation
Three categories of document, and the first one is the one people skip.
1. The order that establishes the date
The whole rule turns on a single date, so the file needs the court document that states it: the discharge order, or the order of dismissal. Not a credit report tradeline notation. Not a bankruptcy attorney's recollection. The order.
Bring the schedules too if the case involved real property. Underwriting will want to see which properties were in the case and how they were treated, particularly if any of them are still in your name.
2. The explanation letter
A satisfactory explanation letter from the borrower or guarantor is required addressing any of these derogatory credit events if the event occurred in the last four years.
Note the mismatch, because it is deliberate and it surprises people: the waiting period is 36 months, the letter requirement reaches back 48. There is a window — roughly a year wide — where the bankruptcy is old enough to be outside the eligibility lookback but recent enough that the file still needs a written explanation from you.
The guideline requires the letter to be "satisfactory" and does not define what makes it so, so treat that as an underwriter's judgement rather than a form to fill in. What consistently works is short, specific and unembarrassed: what happened, when, what resolved it, and what is different now. Dates that match the court documents. No essay, no defensiveness, no blaming the file.
3. Everything the credit section checks anyway
Clearing the bankruptcy clock does not clear the credit requirements. Post-bankruptcy files fail on these more often than on the waiting period itself, because a bankruptcy tends to strip out exactly the credit history the matrix wants to see.
| Requirement | What it says |
|---|---|
| Credit depth | Cannot have only one credit score, or less than 24 months of credit history |
| Trade lines | One trade line is ineligible. A minimum of one trade line must be active |
| Two trade lines | Eligible if there is a satisfactory mortgage rating for at least 12 months (opened or closed) within the last 24 months, plus one additional open trade line |
| Three or more | Eligible if at least one trade line has been open for at least 24 months and two trade lines have a satisfactory rating for 12 months (opened or closed) |
| Authorized user | Not acceptable as a trade line |
| Non-traditional credit | Not acceptable as a trade line |
| Housing history | 1x30x12 across all mortgages disclosed on the credit report |
| Liens and judgments | Tax liens, judgments, charge-offs and past-due accounts must be satisfied or brought current prior to or at closing |
| Medical collections | May remain outstanding if the balance is less than $10,000 in aggregate |
Each borrower and guarantor must meet the trade line minimums independently. That matters when a partnership includes someone who came out of a bankruptcy thin.
The 24-month credit history floor is the one to watch. A borrower three years past a discharge has had three years to rebuild, which is usually enough — but a borrower who emerged with nothing and opened a single secured card can hit the 36-month mark and still be ineligible on depth. Rebuilding is a separate project from waiting, and it runs on its own clock. Start it the day the case closes, not the month you want to buy.
Timing your application
The sequence that works:
1. Get the discharge or dismissal order and read the date on it. Everything downstream depends on this one number.
2. Add 36 months. That is the earliest date a file can be submitted without the bankruptcy sitting inside the lookback.
3. Check whether that date is also inside the four-year explanation-letter window. If it is, write the letter now, while the details are fresh.
4. Audit your trade lines against the table above, independently for every person who will guarantee. Fix depth problems early — they take 12 to 24 months to solve, so they cannot be solved during underwriting.
5. Clear liens, judgments and charge-offs from your own funds, and do not plan on cash-out proceeds to do it.
If your date is close to the line, tell us the date up front rather than submitting and hoping. A file that is two months short is a file that gets declined and re-submitted later; a conversation two months ahead of the date is just scheduling.
What this page does not do
This is not an approval, a pre-approval, a quote, or a rate. Nothing here commits The Fiirm or any lender to a transaction, and eligibility on the credit matrix is one gate among several — the property, the rent coverage, the appraisal, entity documentation and the guaranty structure all have to work too.
It does not cover the other significant derogatory events. Foreclosure, deed-in-lieu and short sale have their own periods and their own measuring dates, covered in [our page on DSCR lending after a foreclosure or deed-in-lieu](/blog/dscr-loan-after-foreclosure-or-deed-in-lieu). Forbearance and loan modification are treated separately again, in [our page on DSCR lending after a mortgage forbearance](/blog/dscr-loan-after-a-mortgage-forbearance).
It does not address anything the guideline is silent on, and there are real gaps here worth naming. The text does not address a confirmed but undischarged Chapter 11, an active Chapter 13 mid-plan, a case converted between chapters, or any separate treatment for repeat filings. We have not filled those in with plausible-sounding numbers. Bring those files to us early and we will tell you what we can underwrite before you spend anything.
It is not legal advice. Whether to file, which chapter, whether to convert, whether to seek dismissal, and what any of it does to your obligations are questions for a bankruptcy attorney, and how a discharge affects your tax position is a question for your accountant. We underwrite loans; we do not advise on the case.
And it does not price anything. Pricing on this program turns on credit score, leverage, coverage and property type, none of which this page addresses. A recent bankruptcy that is outside the waiting period is not automatically a full-price file, and nothing here should be read as a promise about terms.
Guideline DSCR V28 · Reviewed August 31, 2026
Published August 31, 2026 · Updated August 31, 2026
How to use this guide
This article is educational guidance, not an offer or commitment to lend. Rules, property facts, credit, leverage, documentation, and full underwriting still control any actual scenario.