Reaffirming Debts After Chapter 7 Bankruptcy By Petitioners

Gustan Cho Associates
0

This ARTICLE On Reaffirming Debts After Chapter 7 Bankruptcy By Petitioners Was PUBLISHED On November 19th, 2020

Homebuyers can qualify for a mortgage after bankruptcy.

  • Government and conventional loans have mandatory waiting period requirements after bankruptcy
  • Gustan Cho Associates offers non-QM loans
  • There are no waiting period requirements after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale
  • Bankruptcy is a federal law that allows consumers a second chance to discharge their debts and have a fresh financial start
  • Many clients at Gustan Cho Associates become homeowners after a recent bankruptcy
  • It does not take long to re-establish credit after bankruptcy
  • Many of our borrowers have credit scores over 700 FICO in six to twelve months of a bankruptcy discharge
  • Consumers do not have to discharge all of their debts in bankruptcy
  • Reaffirming Debts is allowed

In this article, we will discuss and cover Reaffirming Debts After Chapter 7 Bankruptcy By Petitioners and re-establishing credit after bankruptcy to qualify for a mortgage.

Reaffirming Debts After Chapter 7 Bankruptcy By Petitioners: Reaffirming Debts Allowed When Filing BankruptcyReaffirming Debts

Many consumers want to keep certain debts when filing bankruptcy.

  • The courts allow bankruptcy petitioners in Reaffirming Debts
  • Reaffirming Debts are when consumers want to keep certain debts from being discharged
  • In Chapter 7 cases, many petitioners have secured debts like mortgages, car notes, furniture payments, and jewelry payments they like to keep and continue on paying, there is a special process called Reaffirming Debts
  • When a client signs a reaffirmation agreement you are reaffirming your responsibility on that debt

This means that you will still be liable for that debt after you receive your bankruptcy discharge.

Why Would Consumer Opt-In Reaffirming Debts

Why would someone sign a reaffirmation?

  • The main reason is that people wish to continue getting credit for the future payments that they make on the affected account
  • If a reaffirmation is not completed, creditors are not required to report your payments to the credit bureaus
  • This means that you may not receive credit for the payments you make on your secured debts post-bankruptcy

This is especially important in the case of mortgage payments.

Reaffirming Debts After Chapter 7 Bankruptcy By Petitioners: Reaffirming Mortgage Debt

How Do You Reaffirm Debts During Bankruptcy Filing

A large percentage of bankruptcy filers want to keep their house. They are allowed to do so. However, they would have to reaffirm their mortgage debt.

  • Should you choose not to reaffirm your liability on your mortgage debt, it may be difficult, if not impossible for you to refinance or modify your mortgage in the future
  • This holds true as creditors will not be able to rely on credit reports to assess your payment history on your current account
  • Reaffirmation is not the best option in every case
  • We encourage you to consider your individual set of circumstances when deciding whether or not to reaffirm on your debts
  • The whole point of filing bankruptcy is to get relief from your creditors
  • If you sign a reaffirmation agreement now and choose to or have to stop making payments in the future, the creditor could come after you for the debt you owe

This could lead to garnishments coming out of your paycheck, foreclosures or repossessions of your property.

How Do You Reaffirm Debts During Bankruptcy Filing

In order to reaffirm your debts, the bankruptcy attorney must receive a reaffirmation agreement from your creditor.

  • The bankruptcy attorney cannot draft this document themselves
  • Your bankruptcy attorney contacts the secured creditors after the petitioner’s finalization appointment in an effort to have the petitioner’s reaffirmation agreements ready for them to sign at their 341 hearing
  • However, some creditors may take longer to get the attorney the required documentation
  • Some creditors may not send the reaffirmation at all
  • If the document is not received by the petitioner’s 341 hearing it may be necessary for them to contact the creditor
  • This is in order to ensure that the document is received by the bankruptcy attorney office, signed and returned to the creditor for filing prior to the discharge date of the petitioner’s case

If the creditor fails to file the reaffirmation agreement before the discharge date, the petitioner will not be able to reaffirm the debt.

Qualifying For A Mortgage After BankruptcyWhy Would Consumer Opt-In Reaffirming Debts

Many homebuyers need to file bankruptcy to discharge outstanding collections, charged-off accounts, foreclosures, and judgments in order to qualify for a mortgage.

  • Homebuyers can qualify for a mortgage after bankruptcy
  • Government and conventional loans do require a mandatory waiting period after bankruptcy
  • However, for homebuyers who are ready to purchase a home prior to meeting the mandatory waiting period requirements can qualify for non-QM Loans
  • Non-QM loans do not have any waiting period requirements after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale

In the next paragraph, we will cover the mandatory waiting period requirements on government and conventional loans after bankruptcy.

Reaffirming Debts After Chapter 7 Bankruptcy By Petitioners: Waiting Period Guidelines After Bankruptcy

Below are the mandatory waiting period requirements after bankruptcy and/or housing event to qualify for a government and/or conventional loans:

  • FHA and VA require a two year waiting period after Chapter 7 Bankruptcy
  • USDA has a three-year waiting period requirement
  • FHA and USDA has a three year waiting period after foreclosure, deed in lieu of foreclosure, short sale
  • VA has a two-year waiting period requirement after foreclosure, deed in lieu of foreclosure, short sale
  • Fannie Mae and Freddie Mac has a four-year waiting period requirement to qualify for conventional loans after Chapter 7 Bankruptcy
  • Fannie Mae and Freddie Mac has a four-year waiting period requirement after Chapter 13 dismissal date on Conventional Loans
  • Fannie Mae and Freddie Mac has a two year waiting period requirement after Chapter 13 discharged date on conventional loans
  • FHA and VA does not have any waiting period requirements after Chapter 13 Bankruptcy discharged date
  • Borrowers can qualify for VA and FHA loans during Chapter 13 repayment plan with Trustee Approval

We hope that this article helps our viewers to better understand the reaffirmation process and mortgage process after bankruptcy. However, we understand that you may have some follow up questions or concerns, should you wish to discuss the process further please contact us at Gustan Cho Associates at (262) 716-8151 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

Leave A Reply

Your email address will not be published.

Call Now ButtonCALL NOW