Loans And Other Credit
After you have been discharged from bankruptcy, there is no legal waiting-time requirement that must be met in order to apply for most loans, such as personal loans or car loans. However, lenders will ask for your financial information, including whether you are employed, current debts and assets, in addition to obtaining credit reports which contain information about your credit history and bankruptcy. Therefore, before immediately applying for a loan after being discharged from bankruptcy, it is a good idea to spend some time on repairing your credit, which will increase your chances of getting a loan.
Can I Afford To File A Chapter 7 Bankruptcy Case After Foreclosure
You may be unsure how you would file a bankruptcy case after foreclosure. It took the rest of the money you had to find a place to live and move out of your home. How are you supposed to pay for a Chapter 7 attorney?
Upsolve can help. Our no-cost bankruptcy program assists low-income individuals who cannot afford an attorney to file a Chapter 7 bankruptcy case to get out of debt. We do not require you to pay for our bankruptcy services because we are a non-profit company.
If you are still unsure, you can use our simple Chapter 7 Bankruptcy screener to determine if Upsolve and Chapter 7 is a good fit for you. Answering just 10 simple questions can help you decide if filing a Chapter 7 bankruptcy case is right for you.
Waiting Period For Fannie Mae Or Freddie Mac Loans After Foreclosure
Some mortgage loans adhere to guidelines that the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation set. These loans, called “conventional, conforming” loans, are eligible to be sold to Fannie Mae or Freddie Mac.
Before June 20, 2010, the waiting period for a new loan following a foreclosure was five years. Now, to qualify for a loan under Fannie Mae or Freddie Mac guidelines, you must usually wait at least seven years after a foreclosure.
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Should I File For Bankruptcy After A Foreclosure
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In a Nutshell
Many people consider filing for bankruptcy after their homes are foreclosed. Bankruptcy can get rid of any remaining debt once you sell your home.
Written byAttorney Jonathan Petts.
Unfortunately, it is easy to get behind on our mortgage payments. Once you miss one or two mortgage payments, it can be very difficult to catch up on the payments to prevent foreclosure. The mortgage company makes it more difficult by adding late fees and other costs. In addition, most mortgage companies demand you catch up the payments in one lump sum.
For some individuals, signing over the property to the bank or allowing the bank to foreclose is the only alternative they have because they cannot afford to pay the mortgage payments. However, should you file for bankruptcy after a foreclosure?
Buying A House After Your Bankruptcy Case Will Probably Come Easier And Quicker Than You Think
By Carron Nicks
Eliminating debt by filing a bankruptcy case can make it easier for you to afford a home purchase, but it will also impact your ability to get a loan. So don’t plan on qualifying for a loan the day after your bankruptcy dischargemost lenders won’t be willing to take a chance on you immediately.
Even so, there’s a good chance you’ll qualify for a mortgage loan sooner than you think. Learn how the following will impact your ability to buy a house:
- your post-bankruptcy credit score, and
- qualification requirements of government and private lenders.
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Chapter 7 Waiting Periods
A Chapter 7 declaration must have been discharged or dismissed for 2 years prior to application, if a borrower has either reestablished good credit or not incurred new debt. Its possible an FHA loan will be approved after only 1 year since discharge. That occurs if the borrower shows the bankruptcy was caused by extenuating circumstances, is unlikely to reoccur and they have exhibited an ability to manage their finances since the bankruptcy occurred.
Pay Your Bills On Time
A homeowner who consistently paid bills on time before experiencing a bankruptcy or foreclosure more than likely had a high score before the negative event. Accounting for 35 percent of your FICO credit score, payment history constitutes the largest factor in the score. It makes sense that consistently paying bills on time will boost your score. The reverse is also true: Late payments drag your FICO score down.
What to Do
Lenders want to see a pattern of consistent payments. Demonstrate regular, on-time payments and your score will rise relatively quickly. To stay on top of your payments, enlist the help of your computer or smartphone by setting up payment reminders on a calendar app, or use your lenders’ auto-payment features.
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Rebuild Your Credit And Prepare For The Mortgage Application
While you wait things out before applying for a mortgage again, a good step forward in the right direction would be to work on rebuilding your credit.As you are aware from your first purchase, credit scores play a big part in the loan you qualify for. Here are a few things to consider doing:
Check your credit report first to know where you stand.
Keep balances low and pay off any balances in a timely manner instead of moving it around.
Stay current on your payments. The longer you stay current, the more your score should increase with time.
Set up reminders to help you stay on top of your payments.
Dont open up a bunch of credit accounts in a short-period of time, and dont close unused credit cards, especially in a short period of time. Closing them wont make them go away.
Introduce a good mix of different types of credit.
Consider applying for a credit-builder loan which basically helps you build your credit like a forced savings account. It makes you put money away each month that youll get in the end.
Talk to your mortgage banker for more unique tips that are better tailored to you.Its tough to go through bankruptcy and foreclosure, but youre not alone, and we get it.
Bankruptcy As A Tool To Stop Foreclosure
If you canât pay the amount to get current on your mortgage by the foreclosure sale, filing for bankruptcy is a way to stop the sale. Becoming current means paying the amount due on the mortgage loan, plus any costs and attorney fees the lender incurred to start the foreclosure process. This isnât easy for homeowners with financial problems.
Bankruptcy is a legal process under federal law that helps consumers and businesses find debt relief during difficult financial times. Most individuals file Chapter 7 or Chapter 13 bankruptcy cases. Most bankruptcy lawyers offer free consultations and can tell you more about the bankruptcy process and the difference between these two chapters.
Filing a bankruptcy case is a way to stop a foreclosure sale. Thatâs because federal bankruptcy contains a unique tool known as an automatic stay. It goes into effect the moment you file a bankruptcy petition. The automatic stay bars most collection activities including foreclosure sales. What happens next depends on which type of bankruptcy you file.
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Bankruptcy As A Preventative Measure
Bankruptcy does not deal with secured debt, so filing bankruptcy itself will not legally stop a foreclosure order. However, a bankruptcy proceeding can work as a proactive decision to eliminate other problem debt and improve your cash flow enough that you can afford to catch up on your mortgage payments.
When you file bankruptcy, you dont necessarily have to lose your home. If you can keep your mortgage payment current, Canadian bankruptcy law protects you. Rules around bankruptcy and mortgages say that a secured lender such as your mortgage holder may not cancel your loan just because youve declared bankruptcy or filed a consumer proposal.
In any bankruptcy proceeding, you do have to deal with any non-exempt equity in your home. For example, in Ontario, if the equity in your home is above $10,000, you will have to arrange to pay the equivalent to your Licensed Insolvency Trustee if you want to keep your house. To make these payments more affordable, you can consider a consumer proposal as an alternative to bankruptcy. Bankruptcy and home equity laws vary by province, so it is important to speak with a Licensed Insolvency Trustee about your situation.
Should You File For Bankruptcy Before Or After Foreclosure
Chapter 7 and Chapter 13 bankruptcies come with different benefits. Filing a Chapter 7 bankruptcy case can stop a foreclosure sale, but only temporarily. It allows you to discharge most of your unsecured debts like credit cards and medical bills but not secured debts like a mortgage. A Chapter 7 bankruptcy stays on your credit report for up to 10 years.
Filing a Chapter 13 bankruptcy case stops foreclosure and allows you to reorganize your finances in a 3-5 year repayment plan and to keep your home. It stays on your credit report for up to seven years.
If youâre facing foreclosure and are considering filing bankruptcy, you can decide when to file based on your goals. If you want to keep your home and believe you can solve your current financial problems in the short term, it makes sense to file for bankruptcy before foreclosure. Doing so will buy you enough time to pursue loss mitigation options like forbearance or loan modification, which allow you to keep your home. If you canât keep your home, filing bankruptcy can still buy you time to find another option to resolve your mortgage debt like a short sale or deed in lieu of foreclosure.
If you live in a state that requires you to pay the deficiency balance after a foreclosure sale, it may be beneficial to file for bankruptcy after foreclosure. Youâll be able to discharge this debt in bankruptcy and avoid paying anything more on your foreclosed mortgage loan.
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How Can Peoples Bank Offer A Mortgages So Soon After Bankruptcy
Being one of the only companies in the Country with a department that deals with mortgage loans after bankruptcy, our team is able to help borrowers achieve their goals of buying a house after bankruptcy faster. We are able to tailor our home loan products to address those specific needs that clients have during or after their bankruptcy. Other banks and mortgage companies do not have the experience or the expertise that we have in dealing with getting a mortgage after bankruptcy.
We are adept at identifying, and correcting credit reporting errors that are common to borrowers with a bankruptcy. For our refinance customers, we can work with title experts to clear up any issues with old liens that were not properly stripped off after discharge. This is in sharp contrast to other banks that force you to wait up to two years to obtain a Chapter 13 home loan. Other banks simply do not understand the common problems our clients face. Peoples Bank Mortgage has experienced professionals, that can help clients obtain a mortgage during their Chapter 13 bankruptcy plan or as soon as 1 day after their bankruptcy discharge.
What Are Todays Mortgage Rates
Todays rates are trending higher, but this is all relative they are still among the most affordable in history. Even if youve had a bankruptcy in the past, you can still qualify for todays low rates.
Get a rate quote and check your eligibility to buy again. Youll have answers in minutes.
Step by Step Guide
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Dismissal Vs Discharge Of Your Bankruptcy Claim
When debtors declare bankruptcy, they are asking the Bankruptcy Court to take over their finances. The immediate impact of the declaration is that the court issues a temporary stay of collection activity. That means foreclosure or auto repossession efforts as well as phone calls and letters must stop while the case is being resolved.
In some cases, the court will dismiss Chapter 7 claims if it determines to repay creditors some or all of what they are owed. The determine the debtors income is sufficient, given the cost of living and average incomes in your area. If your bankruptcy declaration is dismissed, you end up back where you started.
If the court accepts a claim for relief, the Chapter 7 filing results in the liquidation of the debtors assets and the debts being discharged. That means, that the debtor is no longer a debtor and can begin with a fresh start and much worse credit. With a Chapter 13 bankruptcy, the discharge is usually granted 4 years after filing, as repayment plans typically last 3 5 years.
What Is Caivrs For Government
The is the federal governments database to track individuals who have defaulted on federal financial obligations like defaulting on a student loan or foreclosing on a home with a government-backed loan.
You will not be able to access the CAIVRS list yourself, but your lender can and will check before approving your loan. If youre applying for an FHA, VA, or USDA loan and youre on the CAIVRS list, then you will not be approved for the loan.
Delinquencies like student loan debt will stay on the CAIVRS list until its resolved in full, but if youve foreclosed on a government-backed loan, then youll have to wait three years before being removed from the list.
Six government agencies report to CAIVRS the Department of Housing and Urban Development, Department of Veterans Affairs, Department of Education, Department of Agriculture, Small Business Administration, and the Department of Justice. If you defaulted on debts to any of these departments, then more than likely youll be on the CAIVRS list.
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Check Your Credit Report For Errors
A critical part of rehabilitating your credit score is checking your credit report for inaccuracies. According to the Federal Trade Commission , about 20 percent of all credit reports contain errors, and 5 percent of consumers have errors on their reports that could result in less-favorable loan terms. Errors enter the system through clerical error, incorrect data entry of Social Security numbers or names, incomplete information, inclusion of information about another individual with a similar name, and the application of a payment to the wrong account.
What to Do
Request free copies of your credit reports through AnnualCreditReport.com, the website created by Experian, Equifax and TransUnion, the three largest CRAs. If you find errors, contact the offending CRA or CRAs, and request the change. It’s essential to correct any errors if you hope to finance the purchase of a new home in the future. You will likely be asked to provide documentation to prove there was a bona fide error and to prove that the new information is a valid correction.
If You Are Only Filing Bankruptcy To Avoid A Deficiency
If the only reason you are filing for bankruptcy is to avoid a mortgage deficiency balance, you could be jumping the gun by filing before your foreclosure sale because you may not be liable for a deficiency anyway.If You Have Assets or Property of ValueMany states have laws that allow a debtor to keep more personal property if the debtor does not own a home. You may be able to keep property you otherwise would have lost by filing for bankruptcy after the foreclosure sale, when you no longer own a home.
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How To Go About Buying A House After Bankruptcy And Foreclosure
Many people still have concerns that buying a house after bankruptcy and foreclosure will hinder their chances of getting a mortgage loan.
- This is absolutely not the case
- People who have lost their homes on a prior foreclosure or had to file bankruptcy can now qualify to purchase a home
- However, there are mandatory waiting period requirements in buying a house after bankruptcy and foreclosure
If you have gone through a prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale, I will explain on this blog on how to go about buying a house after bankruptcy and foreclosure.