Waiting Periods For Other Bankruptcies
While the legal implications behind debt discharge or dismissal outside of Chapters 7 and 13 bankruptcies are beyond the scope of this article, we can share the waiting periods for getting a new mortgage if youve filed Chapter 11 or 12 bankruptcies in the past.
For Chapter 11 bankruptcies, you can get a mortgage through the FHA or VA as long as you otherwise qualify and the bankruptcy was discharged or dismissed 2 years prior to application. The waiting period for conventional loans is 4 years and 7 years for jumbo loans.
For a Chapter 12 bankruptcy, conventional loan policy again differentiates between discharge and dismissal. If the bankruptcy is discharged, that has to have happened more than 2 years prior to application and it has to be filed more than 4 years ago. When the bankruptcy is dismissed, the waiting period is 4 years.
With an FHA loan, the bankruptcy only needs to be discharged or dismissed before you apply. Meanwhile, the VA has a 3-year waiting period prior to application.
Filing for bankruptcy is a big decision that has a lot of implications for your current and future financing. Make sure you discuss your options with a lawyer or your financial advisor before you stop making payments or file for bankruptcy.
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Why Payment History Matters
Regardless of whether you file for Chapter 7 or Chapter 13, your chances of keeping your home improve when you keep up with the payments on it. In a Chapter 13 filing, you restructure your debts in a manner that seeks to make them more manageable. As long as you keep up with your mortgage payments and the other elements of your repayment plan, you should be able to keep your home in a Chapter 13 filing if you wish to do so.
First Things First: The Bankruptcy Discharge
How long after bankruptcy can you buy a house? It varies. However, to even be considered for a mortgage loan request, the bankruptcy must first be discharged. A bankruptcy discharge is an order from a bankruptcy court that releases you from any liability on certain debts and prohibits creditors from attempting to collect on your discharged debts.
In simple terms, this means you dont have to pay the discharged debts, and your creditors cant try to make you pay. A discharge of your debts is just one step in the bankruptcy process. While it doesnt necessarily signal the end of your case, it is something lenders will want to see. The court often closes a bankruptcy case shortly after the discharge.
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What Do I Lose After Declaring Bankruptcy
Generally speaking, if you file under Chapter 13, you wont lose anything. Chapter 13 creates a bankruptcy plan where you make payments to pay off some of your debts during the plan period. You can usually keep your property unless you decide its best to sell it or surrender it to the secured creditors. In some cases, retention of an item of collateral can be raised as a basis for objecting to confirmation of a chapter 13 plan.
If you file under Chapter 7, you dont repay your creditors directly, so you may lose any property that is not exempt based on applicable law. This often leads to additional questions, like:
Your Home And The Chapter 7 Bankruptcy Trustee
Chapters 7 and 13 work very differently, so it’s important to understand what to expectespecially if you want to keep valuable property in Chapter 7. Here’s how it works.
After filing for Chapter 7, your property will go into a bankruptcy estate held by the Chapter 7 bankruptcy trustee appointed to your case. However, you don’t lose everything because you can remove property reasonably necessary to maintain a home and employment. The trustee will sell any remaining assets and distribute the sales proceeds to your creditors.
Here’s the tricky partif you make a mistake, it’s unlikely that the bankruptcy judge will allow you to dismiss the case, and you could lose the house. So you must follow the rules carefully.
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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 â 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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Prince Edward Island Exempt Property
If you are behind on child or spousal support payments, the above exemptions do not apply to any item but tools of your trade.
For details on what you can keep if you go bankrupt in Saskatchewan and the rules for bankruptcy exemptions in that province, please consult a Licensed Insolvency Trustee in Saskatchewan.
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Bankruptcy Exemptions In Nova Scotia
- No limit on clothes for you and your family
- No limit on fuel and food for your family
- Up to $5,000 in household furniture and appliances
- One motor vehicle up to $6,500
- All medical and health aids for you and your family
- Farm equipment, fishing nets, or other tools of your trade up to $7,500
- No limit on grain and seeds or livestock for domestic use by you and your family
For more information on bankruptcy exemptions in Nova Scotia, speak to a local Licensed Insolvency Trustee.
Nunavut bankruptcy exemptions
In Nunavut, property exempt from seizure in bankruptcy is set by the territorial government and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.
Can I Keep My House If I File Chapter 7 Bankruptcy In Colorado
In Colorado, whether you keep your home after filing a chapter 7 bankruptcy depends on three factors do you want to keep it, are you current on the payments, and do you have any equity?
- First, you need to decide whether you want to keep the house. If you owe far more on it than its worth, your interest rates are too high, or if it needs more work than you can afford to put into it, you might be better off letting it go in the bankruptcy and buying again in a few years. In Colorado, almost everyone who wants to keep their home and decides that it makes sense to do so is able to.
- Second, if you file for bankruptcy when youre behind on the mortgage, your lender may either demand that you get caught up right away or ask the court for permission to start the foreclosure process. This creates some risk and is better not left to the discretion of the mortgager. If youre behind it would be wise to talk to an experienced bankruptcy attorney to discuss either getting caught up on payments prior to filing the chapter 7, or to consider a chapter 13 bankruptcy which would allow you to repay arrears over a three or five year period.
How assets are treated in bankruptcy can be a complex issue, so its always best to contact an experienced Denver bankruptcy lawyer for an analysis of your case.
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Your Home And Chapter 13 Bankruptcy
If keeping your home is important to you, you may want to see if you qualify for a Chapter 13 bankruptcy. This type of filing has you restructure your outstanding debts so that they become easier to manage. If you stick to your payback plan and stay current on your mortgage payments, you may be able to keep your house with a Chapter 13 filing.
Keep in mind that, just because a certain bankruptcy type may allow you to keep your home, this does not necessarily mean this is your most favorable option. Sometimes, it may benefit you money-wise to sell your home.
Are Debts Affecting Your Ability To Keep Up With Your Mortgage
Ask yourself this question: If I could deal with all of my other debts, would paying my mortgage be easier? We help people answer that question every day.
Its your home, so you always pay your mortgage, but you are falling behind on your credit cards and other bills, and you worry that you may soon also fall behind on your mortgage payments. You worry that you may lose your home.
You can file bankruptcy even if there is equity in your home. If you owe more money to your creditors than the value of what you own you are considered insolvent. If you are insolvent you are eligible to file for bankruptcy or proposal in Canada.
With up-to-date mortgage payments filing for bankruptcy does not mean you will automatically lose your house. In fact, by eliminating other debts that are making it difficult to keep up with your mortgage payments.
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What Assets Are Exempt From Bankruptcy
You can keep some of your possessions when you file for bankruptcy. These assets are called bankruptcy exemptions because they are exempt from seizure.
When it comes to bankruptcy and assets, why are some assets exempt?
Bankruptcy allows an honest, but unfortunate debtor to get a fresh financial start. When you file for bankruptcy, you surrender most of your assets to your Licensed Insolvency Trustee. The Trustee then turns those assets into cash and distributes the money to your creditors.
However, to achieve a new start you need to keep some essential property. These essential assets are your bankruptcy exemptions, and are defined in the law.
Can I Stay In My Home While It Is Being Sold
Usually, if you are bankrupt, you are not expected to immediately move out of your home. In normal circumstances, the trustee will give you a few weeks to make alternative arrangements.
In some cases, the trustee may allow you to stay in your home during the selling period, provided you assist with the sale process, contribute a fair rent and maintain the home.
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Will I Lose My House If I File For Bankruptcy
- Jennifer Thomas
Its a common fear around filing for bankruptcy that it means youll lose your house. While its true that can happen, its by no means a foregone conclusion. Heres what you need to know about the impact of bankruptcy on your house.
Whether you can keep your house or not will depend on a number of factors: the type of bankruptcy you choose, if youre current on your mortgage, how much equity you have in your house and your states laws.
Is Buying A House After Bankruptcy Possible
A bankruptcy proceeding can reduce or even eliminate your debts, but it will damage your credit report and in the process, which can affect your ability to obtain credit in the future for things such as new credit cards, a car loan, and a home mortgage.
It is possible to buy a house after bankruptcy, but it will take some patience and financial planning. It is important to check your credit report regularly to make sure everything is there that should beand nothing is there that shouldnt be. You can start to rebuild your credit using secured credit cards and installment loans, making sure all payments are made on time and in full each month.
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Do You Risk Losing Your Property If You File For Bankruptcy
Filing for bankruptcy can be intimidating. Its even more stressful when you consider that you could lose some of the property you own because of it. Bankruptcy doesnt mean you lose your assets. It can help you protect your rights and rebuild your credit. A professional bankruptcy attorney can help you to preserve more of your assets.
You might be concerned about your property being lost in bankruptcy. Learn more about the different types of bankruptcy.
Chapter 13
You can keep all property that you own under Chapter 13 bankruptcy filings, regardless of whether it is exempted from liquidation by your creditors. This will allow you to pay down a portion or all of your debts over time if you agree to a 3- to a 5-year repayment plan. When you finish your repayment plan, you will have all of your remaining dischargeable debts paid off and you can keep the assets you have outlined in your protected items.
Chapter 7
You wont have to repay any dischargeable debts if you file under Chapter 7. You might need to surrender items that are considered non-exempt in rare cases. Certain exemptions to Chapter 7 bankruptcy allow you to keep funds in retirement accounts, tools for your business, small vehicles, and equity in your home.
Contact our team today to find out more about filing bankruptcy and what property you could lose.
How Does Chapter 7 Bankruptcy Affect My Existing Mortgage
When you file Chapter 7, your existing property will be deemed either exempt or nonexempt. Exempt means youll be able to keep the property throughout the bankruptcy process, as long as you can catch up and stay current on your payments.
Nonexempt means you will either be required to surrender the property or pay its value in cash as a part of the bankruptcy. In some cases, people are allowed to keep nonexempt properties. It all depends on the bankruptcy trustee and how they choose to handle the property.
To understand how Chapter 7 impacts your existing home mortgage, you must first understand the difference between a loan and a lien.
When you get a mortgage, your mortgage company gives you a loan. They let you borrow money in order to buy a property. When they do that, they place a lien on the property. A lien is a right or interest in the property that the mortgage company has until the debt is paid in full.
When you file Chapter 7, you are no longer legally obligated to repay the loan. Legally obligated is the key phrase here because Chapter 7 does not get rid of the lien on the property. Your lender still has a right to the property if the debt is not paid.
So basically, you dont have to pay your mortgage. But if you dont you will lose your property because your lender will likely enforce the lien they have. If you are able to keep your home as part of Chapter 7, its probably a good idea to do everything in your power to keep paying your mortgage loan.
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What Is An Automatic Stay
Foreclosures and repossessions are the legal actions the creditors may take when a borrower defaults on a secured debt such as a home or a car. Both a Chapter 7 and a Chapter 13 filing would put a stop to these proceedings with what is referred to as the âautomatic stay.â While the stay is in effect, creditors will not be able to move against you or your property. The creditor would have to file for relief prior to continuing with their suit. Often this sets the ground up for negotiations. For a look at frequently asked questions regarding some of these concepts please click here.
What If Im Behind On My Mortgage
If youâre behind on your mortgage payment and â¡ï¸
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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.
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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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Consider The Equity You Have In Your House
Don’t worry, Chapter 7 filers, there are still ways you can keep your house. When deciding whether your house is exempt under Chapter 7, the trustee only considers the equity in your house.
Equity is the market value of your house minus the balance on your mortgages or home equity loans. Many bankruptcy filers have little or negative equity in their houses, so their houses are exempt and need not be sold in the bankruptcy process.
However, if you have equity in your home over the exemption limit, you may be forced to sell your house to pay your debt or “buy it back” by paying the trustee the value of your house.
