Expert Bankruptcy & Debt Relief Insights

The word “bankruptcy” makes it sound like you lose all your possessions, so there is nothing left for creditors to collect, but the business of the bankruptcy courts is properly called bankruptcy protection. The bankruptcy courts work out an agreement whereby they forgive some of your debt in exchange for you paying as much of it as you can afford; a necessary part of the agreement is that certain assets of yours are off limits to creditors.

When you file for Chapter 7 bankruptcy, the bankruptcy court discharges your eligible debts immediately; depending on which assets you own, you might have to forfeit some of your property to settle your debts for less than the amount that you originally owed. In Chapter 13 bankruptcy, your assets are safe from liquidation because the settlement agreement requires you to make payments on an installment plan for three to five years, at the end of which the court discharges the remaining balance of your eligible debts.

Chapter 13 applicants are a heterogeneous group, but one thing they all have in common is a steady income from employment. Therefore, they have more opportunities to start borrowing again shortly after bankruptcy than chapter 7 applicants. To find out more about borrowing money, up to and including home mortgage loans, after filing for chapter 13 bankruptcy, contact an Oakland chapter 13 bankruptcy lawyer.

Applying for a Home Mortgage Loan After Chapter 13 Bankruptcy

If you are employed and struggling with debt, then you are used to living with the stress that new debts keep popping up as soon as you have the old ones under control. Therefore, Chapter 13 bankruptcy is not especially disruptive to your routine. Yes, a Chapter 13 bankruptcy lowers your credit score, but you can quickly get back to borrowing in some circumstances.

Home mortgage lenders impose waiting periods on applicants who have filed for Chapter 13 bankruptcy. If you are applying for a conventional mortgage, you must wait until two years after you have completed the repayment plan and the bankruptcy court has discharged your eligible debts. If the bankruptcy court dismissed your case, you must wait four years before applying for a conventional mortgage.

Lenders of FHA, USDA, and VA mortgages are more willing to lend to people who have filed for Chapter 13 bankruptcy. You do not even have to wait until you finish your repayment plan before you apply for an FHA, VA, or USDA mortgage; you can file as soon as 12 months after making your first payment on the chapter 13 repayment plan. If the court dismissed your Chapter 13 bankruptcy case, you must wait one year from the date of dismissal before you apply for one of these mortgage loans.

Contact the Law Office of Melanie Tavare About Bouncing Back from Bankruptcy

A debt relief lawyer can help you if you are hoping to apply for a home mortgage but have recently filed for bankruptcy. Contact the Law Office of Melanie Tavare in Oakland, California, or call (510) 255-4646 for a case evaluation.