Considering Filing Bankruptcy In Pa
Life after bankruptcy is a chance to start fresh and move forward into a more financially stable future. If youre struggling with deciding whether to file bankruptcy, schedule a free, no-obligation consultation with Philadelphia bankruptcy attorney David M. Offen by calling 215-625-9600. In his 20 years of practice, Mr. Offen has helped over 10,000 clients get a fresh start. He can help you too.
Do You Qualify For A Mortgage
Having a Chapter 13 bankruptcy in your credit history shouldnt stop you from getting a mortgage.
You might even be able to buy a home during Chapter 13 if youre in good standing with your repayment plan and you qualify for the mortgage.
If youve been working hard to pay down debts and improve your financial situation during Chapter 13, you might be able to get a home loan a lot sooner than you think.
Do I Need To Keep In Contact With My Trustee
Normally you don’t. In some cases, your trustee continues to manage your bankruptcy, even after it has ended. For example, your trustee has claimed your house as an asset and they havent sold it yet.
Your trustee may still request you to:
- provide information about your financial situation
- make any outstanding compulsory payments.
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Have An Open Communication
Lying to potential landlords about your bankruptcy is a terrible idea. Most of them will find out regardless when they run your credit history during your application process. Instead, having an open dialogue with them about the circumstances that led up to your bankruptcy, followed by what you have done since to counter it, such as a steady job or income, can help your case. Proving your innocence and determination to do better is the key- once you convince the landlord to place his trust in you, you are more likely to get through the application process. If not, be proud of yourself for being truthful. Chances are that the landlord appreciated your frankness.
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What If Im Behind On My Mortgage
If youâre behind on your mortgage payment and â¡ï¸
you donât want to keep the house: Chapter 7 provides a mechanism to surrender the house to the bank and discharge your obligation to pay the loan. This will protect you if your mortgage loan is a ârecourseâ loan where the bank could otherwise try to collect a deficiency judgment after the foreclosure.
you do want to keep the house: Chapter 7 is not ideal. It doesnât provide a mechanism to catch up on your mortgage payments. This means youâre still at the mercy of the bank and their willingness to modify your home loan to deal with your arrearage. If you can afford to make your full mortgage payments now, Chapter 13 bankruptcy may offer a solution.
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You May Make Surplus Income Payments
When you file for bankruptcy, you must do the following:
- disclose to the LIT information about all of your assets and liabilities
- advise the LIT of any property that was sold or transferred in the past few years
- surrender all your credit cards to the LIT
- attend the first meeting of creditors
- attend two counselling sessions
- advise the LIT in writing of any address changes
- if required, attend an examination at the Office of the Superintendent of Bankruptcy and
- assist the LIT as needed in administering your estate.
You may be required to make additional payments to your LIT for distribution to your creditors.
In addition to paying the LIT’s fees, you may be required to make additional payments to your LIT for distribution to your creditors. These are called surplus income payments.
Each month during the bankruptcy process, you must submit a copy of your pay stubs and proof of other income to the LIT. The LIT then calculates your surplus income.
Surplus income is the part of your earnings that exceeds the amount of income a family needs to maintain a reasonable standard of living. This amount is set by the OSB annually. The larger your family, the more you are allowed to keep the more you earn, the more you are required to contribute.
In other words, if your household income exceeds the level set by the OSB, then you must make additional payments to your LIT during your bankruptcy.
Want A Free Bankruptcy Consultation
If youve been considering filing bankruptcy but youve had the fear of not being able to move to a new place, let us help ease your fears.
A bankruptcy is nothing to be afraid of, especially when you have an experienced law firm to help you make the decision as to whether or not its right for you.
Call us at 327-2100 today to schedule your free appointment. Or you can contact us online.
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How Long After Bankruptcy Can I Buy A House
Its possible to buy a house shortly after being discharged from bankruptcy, although you will likely need a co-signer to obtain a mortgage, and that mortgage will likely come at a higher interest rate. After bankruptcy, you may want to focus on rebuilding your credit: getting a secured credit card could be a good place to start.
A Fresh Start After Bankruptcy
Mei Ling and Matt are a married couple who rent a flat in Gosford NSW. Both worked full time until two years ago when Matt lost his job. Mei Ling now works part time earning less than $40,000 per year.
For two years they tried to survive on Mei Lings wage, struggling to make repayments on their overdue credit cards and loans. They ended up with unsecured debts of over $65,000.
The only assets they owned were a car worth $5,000 and general household goods .
The pressure from their creditors became too much to handle. Debt collectors and process servers were constantly calling on them. Their electricity was turned off a few times and they stopped answering phone calls because it always seemed to be bad news. Matts health was also suffering and he was treated for depression. Most nights Mei Ling would end up in tears thinking about their situation.
They finally decided to see a financial counsellor. There was no charge for this service. The financial counsellor looked through their finances and suggested they consider filing for bankruptcy.
Matt and Mei Ling went home and looked in detail at the AFSA website. They read all about their options and the consequences of bankruptcy. The AFSA website showed that they would be able to keep their car because it was worth less than the set amount. They read they could also keep their household goods. In the end, they decided that bankruptcy would be the best option for them.
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How Long After Bankruptcy Should You Wait Before Buying A House
Most people applying for a loan will need to wait two years after bankruptcy before lenders will consider their loan application. That said, it could be up to a four-year ban, depending on the individual and type of loan. This is because lenders have different seasoning requirements, which is a specified amount of time that needs to pass.
Fannie Mae, for example, has a minimum two-year ban on borrowers who have filed for bankruptcy, says David Reiss, professor of law and academic programs director at the Center for Urban Business Entrepreneurship at Brooklyn Law School.
The FHA loan, on the other hand, has a minimum one-year ban in place after a bankruptcy. These bans, or seasoning periods, are typically shorter with government-backed loans than with conventional loans.
The time is measured starting from the date of discharge or dismissal of the bankruptcy action. Generally, the more time between debt discharge and the loan application, the less risky a once-bankrupt borrower looks in the eyes of a mortgage lender.
Show You Have Sufficient Income
Using the Chapter 13 plan to catch up on your arrearages will only work if you have the income to make both your regular monthly mortgage payment and your plan payment while you’re in bankruptcy.
Once you’re in Chapter 13, the mortgage holder can’t foreclose if you’re paying your house and plan payments on time and keeping to your mortgage terms, like ensuring that you have homeowners insurance in place.
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Securing A Mortgage After Foreclosure
Often times, a foreclosure leads to bankruptcy. If you cannot keep up with your mortgage payments, the bank will eventually foreclose your property. Your home may be sold at a sheriffs sale for less than you owe and youll be responsible for paying for the remaining loan amount. If you cannot pay the remaining loan amount, you may need to file for bankruptcy to discharge the money you owe.
If you are forced to file for bankruptcy following a foreclosure, know that you may still qualify for another mortgage in the future. In most cases recovering from foreclosure and getting approved for another mortgage can take seven years. However, each lender has different time frames in which it will reconsider someone who has filed for bankruptcy.
If your foreclosure occurred prior to your bankruptcy, your waiting period will start the day of your discharge. In the event that your foreclosure took place following your bankruptcy, your bankruptcy discharge date rather than your foreclosure date will be used.
Can A Bankruptcy Trustee Take My Home
Itâs not common, but itâs possible in certain circumstances.
The bankruptcy trusteeâs job is to sell non-exempt property for the benefit of unsecured creditors. That includes personal property and real property. Whether your home is safe from the trustee depends on whether it has any ânonexempt equityâ which in turn depends on its market value.
As a reminder, hereâs how we calculate equity in this scenario:
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Consider Renting From A Private Property Owner
If you are trying to rent from a large chain, you may find that their hands are tied by corporate policies when it comes to what factors they must consider when approving an applicant. You may have better luck going through a private property management company, instead. Many will rent to you with no credit check required. Even if they do run a credit check, a private company may have more flexibility when it comes to their application requirements.
I would get a realtor. Realtors not only sell homes but find people places to rent.
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Conforming Loan With Chapter 13 Bankruptcy
Its much tougher to get a conforming loan after Chapter 13 bankruptcy.
Fannie Mae and Freddie Mac the two agencies that set conforming loan rules are stricter than the government agencies. They will not allow borrowers to apply while working through a Chapter 13 plan.
Your bankruptcy must be either discharged or dismissed to qualify for a conventional mortgage. And theres a waiting period:
- Two years after Chapter 13 discharge date
- Four years after Chapter 13 dismissal date
Remember, discharge happens after you complete the 3 or 5year repayment plan.
So altogether it could take up to 7 years after filing for Chapter 13 before you can get a conventional loan.
Filers who fail to complete the plan may have their bankruptcy dismissed. They probably still owe their creditors and will have to wait at least 4 years from the dismissal date before they can apply for conventional financing.
Filers with multiple bankruptcies in the past seven years will have to wait at least seven years from their most recent discharge before applying.
It may be easier to buy a house after Chapter 13 discharge if your bankruptcy was caused by extenuating circumstances.
Extenuating circumstances are typically onetime events outside your control that have a serious negative impact on your finances.
Examples include a severe illness or disability, a company layoff, or the death of the primary wageearner.
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Is It Hard To Buy A House After Bankruptcy
Getting a loan will be very difficult for a few years immediately following a bankruptcy, says Reggie Graham, branch manager for Silverton Mortgage.
He notes that home buyers applying after bankruptcy can often expect bigger down payment requirements and higher interest rates.
Your focus should be on rebuilding your credit to prepare for applying for a mortgage loan when youre ready, says Graham.
Keep in mind that a bankruptcy filing stays on your credit reports for 10 years.
This doesnt hinder your ability to buy a home. But its realistic to acknowledge that a lender is going to consider that fact when reviewing your loan request, cautions Heck. My suggestion is to expect two to three years to rebuild your financial health following a bankruptcy.
Graham also suggests the wait time to buy a home may be shorter if you file a Chapter 13 bankruptcy instead.
Chapter 13 involves paying back an agreedupon portion of your debt, which lenders look more kindly upon, he explains.
Can I Keep My Home After Filing Bankruptcy
The answer, like so many others in law, is that “it depends.” Most people that declare bankruptcy can keep their houses throughout the process, but some are not.
Keeping your home is often the biggest worry about filing for bankruptcy â and which Chapter to file for. This article will give you some useful information so you can know what to expect.
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How Long After A Chapter 7 Can I Buy A House
If youre reading this, theres a good chance youve filed for Chapter 7 bankruptcy. Its during Chapter 7 that the court wipes away ones debt, leaving them with less than ideal credit.
You will need to wait at least four years after your bankruptcy is dismissed or discharged before qualifying for a mortgage. Not sure you can wait for that long? Then look into requirements for government-backed programs such as FHA, VA, and USDA loans. You may be able to obtain a mortgage with one of these loans in just a few years following the discharge or dismissal of your bankruptcy.
Check If Someone Else Has A Legal Right About Your Home
Someone might have a legal right about your home if they either:
- live with you
- helped pay for your home – for example if theyve paid some of the deposit or mortgage
If someone lives with you and theyre your wife, husband, civil partner or child, they have a legal right to stay in the home.
If someone has helped pay for your home, they might have a right to some of the money if your home is sold. Their share is called their beneficial interest.
Someone can have a beneficial interest even if they dont own the home, or if they live somewhere else.
Each persons beneficial interest is the amount of money they would get after anything secured on your home, for example mortgages or loans, has been paid back.
If you own the property jointly, the beneficial interest is normally shared equally between you and the other owners.
If another owner has paid more than you, they might be entitled to a bigger share. Talk to an adviser if you need to prove someone should have a bigger share than you.
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I Filed Bankruptcycan I Sell My House Now And Keep My Equity
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There are a lot of questions that need answers before the decision to file bankruptcy. There are a lot of questions that come up during the bankruptcy process. And there are more questions that crop up once the bankruptcy is closed and the discharge is received. One common post-bankruptcy question is, Can I sell my house and keep the equity once my bankruptcy is completed?
Once the bankruptcy case is closed, the petitioner can sell any remaining assets they still own, including their home. If they still own their home once their bankruptcy case is closed, that means the bankruptcy trustee abandoned the house as an asset of the bankruptcy estate. It is important to point out that selling your home after bankruptcy may be problematic if the plan is to immediately turn around and buy a new home.
While you CAN sell a home immediately after bankruptcy, you can also buy a home after bankruptcy. As you might expect, bankruptcy can actually be an impediment to qualifying for a conventional mortgage for seven years. You may be able to obtain an approval on a mortgage insured by the Federal Housing Administration after approximately two years, but will at least be able to show that you have re-established good credit during the two years since filing for bankruptcy.
Find Out Whether You Can Keep Your Home In Chapter 7 Or Chapter 13 Bankruptcy
Updated by Cara O’Neill, Attorney
It’s possible to keep a home when you file for bankruptcy, but the circumstances must be right. You’ll need to be sure that you meet the requirements of the chapter you file. For instance, Chapter 7 filers must be current on payments and protect all home equity with a bankruptcy exemption. By contrast, Chapter 13 filers can catch up on missed mortgage payments and keep the home. Read on to learn about:
- protecting home equity in Chapter 7 and 13
- keeping a home in Chapter 7
- catching up on past-due payments in Chapter 13, and
- removing liens and lowering mortgage payments in Chapter 13.
If you’d like step-by-step guidance through the bankruptcy process, read What You Need to Know to File for Bankruptcy in 2021.
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