mortgage after bankruptcy

Buying a home is an important rite of passage for many. Fortunately, declaring bankruptcy does not automatically disqualify an individual from this opportunity. Chapter 7 and Chapter 13 are the most common types of bankruptcy filed. Both Chapters leave the debtor with the possibility of getting a mortgage after bankruptcy is complete. In Chapter 13 case, the debtor may be able to obtain a mortgage while the case is still open. Please note, the effects of bankruptcy are different in each case, you should contact a Tampa bankruptcy lawyer before taking any action. A bankruptcy lawyer can help develop a game plan to rebuild your credit based on your specific circumstances.

Difference Between Chapter 7 & Chapter 13 Bankruptcy.

Chapter 7 is often referred to as a liquidation bankruptcy. In Chapter 7 cases, the borrower may be required to liquidate non-exempt assets as a condition of the case. On the other hand, Chapter 13 is a reorganization bankruptcy. In Chapter 13 cases, the debtor consolidates their existing debts into one monthly bill that is paid to a bankruptcy trustee.

Unlike Chapter 7 bankruptcy, borrowers will not be required to sell their assets in a Chapter 13 case. Rather, Chapter 13 is considered a restructuring bankruptcy because the debtor continues to make payments to their creditors, according to the Chapter 13 plan. Due to this difference, many creditors view Chapter 13 more favorably than Chapter 7 when evaluating a borrower for a mortgage after bankruptcy. Both Chapter 7 and Chapter 13 have their own unique advantages and disadvantages. If you are considering bankruptcy,  consult with an attorney for advice on which chapter is best for your specific needs.

Getting a Mortgage After Bankruptcy: FHA and VA Mortgages

The FHA and Veteran’s Association allow a debtor to qualify for a mortgage in just years after the discharge. See FHA Regulation 4155.4 In most cases, the discharge of the bankruptcy is completed after filing is complete, the non-exempt assets are liquidated, and as a result the debtor is relieved of all debt. As with most legal issues, the outcome will depend on the specific circumstances of each case. Therefore, you should consult a bankruptcy attorney for assistance on getting a mortgage after bankruptcy.

Qualifying for a Fannie Mae Mortgage after Bankruptcy

A borrower can become eligible for getting a mortgage after bankruptcy with Fannie Mae  after only two years have passed since a Chapter 13 discharge. Moreover, if a debtor makes 12 consecutive Chapter 13 payments they may be given permission to increase their debt. The increase in debt may even include obtaining a new mortgage. For Chapter 7 cases, Fannie Mae will require borrowers to wait at least 2 years after a Chapter 7 discharge to qualify for a mortgage after bankruptcy.

Tampa Bankruptcy Law Firm

At Florida Law Advisers, P.A., we understand that filing for bankruptcy can be a very confusing and intimidating process.  That is why we work so hard to make the process as easy as possible for our clients. When you hire Florida Law Advisers, P.A., you have an experienced Tampa bankruptcy attorney by your side throughout every phase of the bankruptcy process. We will help ensure your rights are protected and the process is as easy as possible. To schedule a free consultation with a Tampa bankruptcy lawyer at our firm call us at 800 990 7763.

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