Can I Qualify For Mortgage After Chapter 13 Bankruptcy?

Mortgage After Bankruptcy

Gustan Cho Associates

There are two types of bankruptcy.  A Chapter 7 bankruptcy and a Chapter 13 bankruptcy for individuals.  A Chapter 7 bankruptcy is total liquidation and is often filed from consumers who have no assets and either little income or no income.  You can file a Chapter 7 bankruptcy and still keep your home.  A Chapter 7 bankruptcy gives consumers a fresh start and wipes out all debts, collection accounts, and judgments.  However, tax liens, student loans, child support, debts incurred due to fraud, and all types of government loans or government obligations cannot be discharged with a Chapter 7 bankruptcy.

Chapter 13 bankruptcy is the second type of consumer bankruptcy which is filed by consumers who are employed or have income and assets or consumers who want to protect their assets.  You need income in order for you to qualify for a Chapter 13 bankruptcy.  If you have no income, you will not qualify for a Chapter 13 bankruptcy.

Chapter 13 Bankruptcy

Filing Chapter 13 bankruptcy will halt all collection activities by your creditor and a bankruptcy trustee will be appointed to you by the United States Bankruptcy Courts who will be in charge of restructuring your debts and approve a re-payment plan with your creditors.  The Chapter 13 bankruptcy trustee will review your income and will allocate a percentage of your income to pay your creditors.  Once a Chapter 13 bankruptcy is filed, there will be a re-payment plan for a number of years where you make a reduced monthly payment to your creditors.  It can be a 3 year re-payment plan, a 4 year re-payment plan, or 5 year re-payment plan.

Chapter 13 Bankruptcy Discharge

Once you are timely on all of your payments within the period of your re-payment plan, your Chapter 13 bankruptcy will get discharged which means that whatever balance you owe your creditors will be wiped out.  If during your re-payment plan of your Chapter 13 bankruptcy you default, your Chapter 13 bankruptcy will be dismissed and you will still have those liabilities.

Chapter 7 Bankruptcy

Many consumers who start out with filing a Chapter 13 bankruptcy and lose their jobs during the re-payment plan often convert to a Chapter 7 bankruptcy.  There are many cases where a Chapter 13 bankruptcy gets dismissed and gets converted to a Chapter 7 bankruptcy.  Consumers who have filed either a Chapter 7 bankruptcy or Chapter 13 bankruptcy can qualify for mortgage after Chapter 13 bankruptcy or Chapter 7 bankruptcy.  However, there are certain mandatory waiting periods after bankruptcy for FHA Loans, VA Loans, USDA Loans, and Conventional Loans.  Mortgage after Chapter 13 Bankruptcy is different than Chapter 7 bankruptcy.  Each bankruptcy type have separate waiting period requirements after bankruptcy.  If you filed bankruptcy, the requirements to qualify for mortgage after bankruptcy will depend on the type of bankruptcy you filed, the type of mortgage loan type you want, and your credit scores, income, assets, liabilities.

 Waiting Period After Chapter 13 Bankruptcy And Chapter 7 Bankruptcy For FHA And VA loans

For FHA loans and VA loans, the waiting period to qualify for a mortgage after Chapter 7 bankruptcy is two years from the discharge date of the Chapter 7 bankruptcy.  To qualify for mortgage after Chapter 13 bankruptcy, there is a minimum of one year waiting period after Chapter 13 bankruptcy, however, you need to have the U.S. Bankruptcy Court approval and show a history of 12 months timely payments of your Chapter 13 re-payment plan.  Mortgage lenders will require a detailed letter of explanation to the mortgage underwriter as of what initiated the Chapter 7 bankruptcy and/or Chapter 13 bankruptcy.  There is no waiting period after a Chapter 13 discharge date, however, the chances are that the mortgage loan applicant will not get an automated approval per DU FINDINGS and may need to be manually underwritten in order to get a mortgage loan approval.

Waiting Period For USDA Loan After Bankruptcy

USDA loan lending guidelines on waiting period after Chapter 7 bankruptcy discharge is a mandatory waiting period of 3 years from the Chapter 7 discharge date.  Waiting period to qualify for a USDA loan after a Chapter 13 bankruptcy is a 12 month waiting period and providing 12 months of timely re-payment to creditors as well approval from the trustee of the United States Bankruptcy Courts.  For those who had a discharge of Chapter 13 bankruptcy, there is a 12 month waiting period of the discharge date of the Chapter 13.

Conventional Loan Guidelines On Mortgage After Bankruptcy

Conventional loan guidelines with regards to qualifying for mortgage after Chapter 7 bankruptcy is a mandatory waiting period of four years after the discharge date of the Chapter 7 bankruptcy.  There is a mandatory two year waiting period to qualify for mortgage after Chapter 13 bankruptcy discharge date.  In the event if you have a Chapter 13 dismissed, there is a four year waiting period from the dismissal date of Chapter 13 bankruptcy to qualify for mortgage after Chapter 13 bankruptcy.

Late Payments After Bankruptcy

Other requirements to qualify for mortgage after bankruptcy is that you cannot have any late payments after bankruptcy and if you do, it will be tightly scrutinized and reviewed and a good letter of explanation to mortgage underwriter will be required.  You also need re-established credit after bankruptcy and many mortgage lenders will require at least three credit tradelines.  A credit tradeline is a credit history with at least a 12 months payment history.

If you had a prior bankruptcy or had lower credit scores or issues and were told that you do not qualify from another mortgage company, please contact me at www.gustancho.com or click this icon, APPLY NOW FOR PRE-APPROVAL  or call me at 262-716-8151.

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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