---

This guide covers reaffirming debts after bankruptcy. 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, or short sale with non-QM loans. Alex Carlucci, a senior loan officer at Gustan Cho Associates says that non-QM lenders can change their guidelines on the waiting period requirements after bankruptcy or foreclosure without any notice like they often do:

Non-QM lenders often can change the no waiting period requirements after bankruptcy or foreclosure to a one-year waiting period. This happened before by non-QM wholesale lenders when the secondary market was volatile like when the coronavirus outbreak happened.

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 within six to twelve months of a bankruptcy discharge. Consumers do not have to discharge all of their debts in bankruptcy. Reaffirming debts after bankruptcy is filed is allowed.

What Kind of Debts Is Allowed? Reaffirming Debts After Bankruptcy 

Many consumers want to keep certain debts when filing for bankruptcy. The courts allow bankruptcy petitioners to Reaffirming Debts after bankruptcy is filed. Reaffirming debts after bankruptcy is 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 paying. There is a special process called reaffirming debts after bankruptcy. When a client signs a reaffirmation agreement, you reaffirm your responsibility for that debt. This means you will still be liable for that debt after receiving your bankruptcy discharge.

Why Would Consumers Opt-In Reaffirming Debts After Bankruptcy 

Why would someone sign a reaffirmation? The main reason is that people wish to continue getting credit for the future payments on the affected account.. If a reaffirmation is not completed, creditors are not required to report your payments to the credit bureaus. This means 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 Bankruptcy Is Filed on Mortgage Debt

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 cannot 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 set of circumstances when deciding whether or not to reaffirm your debts. The whole point of filing for 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 from your paycheck, foreclosures, or property repossessions.

How Do You Reaffirm Debts During Bankruptcy Filing

The bankruptcy attorney must receive a reaffirmation agreement from your creditor to reaffirm your debts. The bankruptcy attorney cannot draft this document themselves. Your bankruptcy attorney contacts the secured creditors after the petitioner’s finalization appointment to have the petitioner’s reaffirmation agreements ready for them to sign at their 341 hearing.

Some creditors may take longer to get the attorney the required documentation. Some creditors may not send the reaffirmation at all. If the petitioner’s 341 hearing does not receive the document, it may be necessary for them to contact the creditor.

This is to ensure that the bankruptcy attorney’s office receives the document, signed, and returned to the creditor for filing before the discharge date of the petitioner’s case. If the creditor fails to file the reaffirmation agreement before the discharge date, the petitioner cannot reaffirm the debt.

Qualifying For a Mortgage After Bankruptcy

Many homebuyers need to file bankruptcy to discharge outstanding collections, charged-off accounts, foreclosures, and judgments 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, homebuyers who are ready to purchase a home before 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, or short sale. In the next paragraph, we will cover the mandatory waiting period requirements on government and conventional loans after bankruptcy.

Reaffirming Debts After Bankruptcy Waiting Period Guidelines For a Mortgage

Below are the mandatory waiting period requirements after bankruptcy or housing event to qualify for government 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 have a three-year waiting period after foreclosure, a deed-in-lieu of foreclosure, and a short sale.

VA has a two-year waiting period requirement after foreclosure, deed-in-lieu of foreclosure, and short sale. Fannie Mae and Freddie Mac have a four-year waiting period required to qualify for conventional loans after Chapter 7 Bankruptcy. Fannie Mae and Freddie Mac have a four-year waiting period requirement after the Chapter 13 dismissal date on Conventional loans. Fannie Mae and Freddie Mac have a two-year waiting period requirement after the Chapter 13 discharge date on conventional loans. FHA and VA do not have any waiting period requirements after the Chapter 13 Bankruptcy discharge date.

With Trustee Approval, borrowers can qualify for VA and FHA loans during the Chapter 13 repayment plan. We hope this article helps our viewers better understand the reaffirmation and mortgage processes 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 alex@gustancho.com. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays.