Bankruptcy and Refinancing
Once the bankruptcy has been discharged, what should YOU do? What does a bankruptcy do to your chances for refinancing or being able to acquire a mortgage in the future? In this review you can read more on bankruptcies and refinancing.
In the first place, if you haven’t been late on mortgage payments and the mortgage was not included in the bankruptcy, do not be late on ANY payments to any creditor. Lenders of all types, will not refinance a borrower’s loan if there are any late payments during or after a bankruptcy.There are two types of bankruptcies that a person may file. One is a chapter 7 and the other a chapter 13.
Your Mortgage & Chapter 7 Bankruptcy
In a chapter 7 bankruptcy, all debts are liquidated and unpaid to the creditors. If the attorney feels the borrower can make the mortgage payments, typically an attorney will not include the mortgage(s) in the list of creditors to be liquidated. This will show that the borrower at least paid is mortgage(s) on time. If the mortgage is included, then the possibility of finding a lender to refinance the loan(s), is greatly diminished.
If you are with your back to the wall, get the Bankruptcy Backoff Assitance to walk you out of trouble.
What Does Chapter 13 Bankruptcy Mean
In a chapter 13 bankruptcy, the debts are reduced to a fraction of the original amounts owed and a trustee is appointed by the courts to receive the payments. It is imperative that these payments are made on time and in full as directed by the court. If a borrower decides he wants to refinance while the bankruptcy is still not discharged by the court, there are two requirements which must be met.
- Firstly, there must be a one year history of the trustee being paid on time.
- The trustee must grant permission for the borrower to do so. No lender, especially with the newer rules in place, will originate and process a loan that has no chance of closing.
In terms of rates and fees, one can expect that the rates and fees will be higher. It is important that the borrower be on the lookout for irregularities from the prospective lender for changing Good Faith Estimates that make no sense, rates that shift and change without notice and terms and conditions that are worded so as to be confusing to read and understand. Under the new rules, wording lending conditions such that a borrower cannot understand them is not only un-ethical, it is illegal.
Refinancing Chances After Bankruptcy
So, yes, it is possible to have filed a bankruptcy and refinance afterward. With the new rules in place, it is also more difficult to file a bankruptcy. One of the reasons, and this is the one that had creditors up in arms, was that borrowers were borrowing a lot of money and purchasing on credit, only to become insolvent as a method of avoiding paying the just debts that are due.
What To Do..
Most important is to get professional assistance, you may want to Join Us and Reveal How To Stop Foreclosure and Debt Collectors Immediately.
To get better chances for refinancing after bankruptcy the best thing for a borrower to do is contact the creditors when difficulties arise and enter into different repayment plans, including debt management, credit counseling and lastly bankruptcy.
Read more posts:
- How To Prove Income When Requesting To Refinance
- Income Documentation Changes For FHA Loans
- Risk Based Pricing And Your Mortgage 1003 Application Approval
- Short Sale Tax Consequences For 2011