Commonly abbreviated as the two letters BK, Bankruptcy is a legal protection afforded by court proceedings intended to provide relief to an individual or business unable to repay its debts.If someone is already in a Chapter 13 bankruptcy and own their own home, they may elect to apply for a Chapter 13 buyout loan.
Sometimes arrearages that were a result of late or missed mortgage payments might not be included in the payoff that you received from the Trustee. This could greatly reduce the amount of cash out you might receive once you refinance.
Most non-prime mortgage lenders have loan programs to help homeowners who have filed bankruptcy. Many even offer loans to those who are only one day out of bankruptcy.
New Bankruptcy laws are more strict and the BK will be set to a 5 year pay back plan.
Before filing for BK consult us to see if there are alternatives.
If you have filed BK and want to obtain a mortgage, find a mortgage professional who specializes in helping the credit challenged. You will usually find this with a mortgage broker due to the broker's ability to place loans with multiple lenders. Having this ability allows the mortgage broker to research a lender with niche or special programs that do not conform to the standard guidelines.
Broker's get used to working with certain lenders and fully understand their guidelines which makes the mortgage process easier and go through with less challenges.
A Chapter 13 buyout works similar to a cash-out refinance, except that the cash taken out from the refinance is used to payoff you bankruptcy debts, thus discharging from your Chapter 13.
It is important to remember that it is up to the Trustee as to whether or not you will be able to refiance or not and under what terms.
It is important to remember that most Attorney's charge an extra fee to file for a motion with the court in order to proceed with a Chapter 13 refinance buy out.
In some cases it might not be a good idea to refinance right away. Most Chapter 13 Refiance loans have a prepayment penalty that need to be factored in to your bottom line.
If you are considering a chapter 13 refinance loan you should also obtain a copy of your credit report and make sure that the items that were included in the Bankruptcy were updated to that effect to show that they were in fact included in your Bankruptcy.
There are many loan programs for people who have filed BK. These programs are for refinancing and purchasing homes.
Chapter 13 Bankruptcy reorganizes debts under the supervision of a court ordered repayment plan. This is commonly referred to as a wage earner plan. Part of the individual's income is appropriated every month for distribution to their creditors.
Chapter 13 allows the individual to save and keep their property, and very often provides 3 to 5 years to repay debts.
With bankruptcies at all time highs the courts have changed the bankruptcy laws making it much harder to file for Bankruptcy. Credit card debt is at an all time high and this is one reason for the numerous bankruptcies. Consult with a mortgage consultant before filing bankruptcy to see if there are any debt consolidation options available or any other options available to save you enough money so that you can avoid filing bankruptcy.
For individuals, Bankruptcies come in two common varieties:
Chapter 13 Bankruptcy
Chapter 7 Bankruptcy
Although these programs will have higher interest rates, these loans are a great way to reestablish your credit profile and just two years of timely payments on a mortgage will do wonders for your credit score. Most borrowers refinance these loans within 4 years of obtaining them because they become eligible once again for certain conventional loan programs.
If you have filed bankruptcy in the past the odds are there is a mistake on your credit report somewhere. Maybe an account didn't report as being in the bankruptcy and still shows an outstanding balance which would adversely affect your credit. This is why it is crucial to always check your credit on a yearly if not quarterly basis.
Countrywide offers great programs for individuals ONE DAY (1) after they have had their bankruptcy discharged!
A legal procedure initiated voluntarily by the borrower or forced by creditors when the borrower does not make payments. Then the court divides the borrower's property among creditors to pay off obligations.
Chapter 7 of the Bankruptcy Code provides for liquidation of an individuals non-exempt property, which may include the primary residence of the individual.
Lenders will still lend you money if you have filed a BK. However they will require a certain amount of time to be placed between you and the discharge date. Often they need to see you have re-established yourself.
Many lenders realize "bad things happen to good people". There are many programs available to those involved in a chapter 13 BK to help them refinance their current mortgage and pay off their bankruptcy. The lenders are going to look for a consistent payment history since the Bankruptcy was filed.
Recently bankruptcy laws have gotten more strict. If you have equity in your home you may want to consult with us to assist you with avoiding bankruptcy.
