In this article, we will discuss and cover reaffirming home loans after bankruptcy. Reaffirming Home Loan After Bankruptcy is a very common question. Milwaukee Attorney James Miller of Miller and Miller LLC Attorney at Law is often asked. Many homeowners think that if consumers file bankruptcy, they must vacate their property immediately. James Miller further explains the following:

You will have to pay your general unsecured creditors whatever amount of non-exempt equity exists after closing costs. Under this situation, the bank generally wants you to reaffirm the debt, meaning you can keep your house and make the mortgage payments. Although, if you default on mortgage payments after reaffirming such debt, you could be personally liable for any future deficiency judgments.

They are under the impression that sheriff’s deputies will come and go through their personal belongings and throw them out on the street. There are federal laws and the answer to Reaffirming Home Loan After Bankruptcy. In the following paragraphs, we will cover reaffirming home loans after bankruptcy.

Excluding your Home in Bankruptcy

Homeowners can keep their homes and decide to exclude their homes from bankruptcy. Or homeowners can include the debts or mortgage as part of the bankruptcy. This material should be useful in reducing stress and anxiety so consumers understand what is going on when they receive a motion to modify the stay on mortgage or car. Or, consumers receive a “Notice of Mortgage Payment Change” through the mail from their lender. I understand that much of this can be confusing or overwhelming. Bankruptcy is not the end of the world. People can purchase a home after bankruptcy. They need to meet certain waiting periods to qualify for a mortgage after bankruptcy to qualify for a home loan.

Reaffirming Home Loan After Bankruptcy And Making Mortgage Payments

That depends on your intentions and what you plan to do with your home: If you plan to keep your real estate, then yes. If you were current with your mortgage payments at the time of filing, then you keep making your payments regardless of which chapter you filed. James Miller, bankruptcy attorney for Miller and Miller Bankruptcy Lawyers, explains the following:

If delinquent mortgage payments were the reason for bankruptcy, you likely filed a Chapter 13 bankruptcy. After filing Chapter 13, your mortgage payments will resume. It becomes due during the following month as though you were current and never missed a payment.

Your previously missed mortgage payments are then put into your plan payment, possibly with some percentage of other debt and vehicle loans. You will then begin making payments to a Chapter 13 bankruptcy trustee. The trustee will take monthly payments and disburse them to your creditors, such as your mortgage company, automobile lender, credit card companies, etc.

Reaffirming Home Loan After Bankruptcy With Chapter 7 Bankruptcy

It is perfectly acceptable to file a Chapter 7 bankruptcy and keep your house, so the answer is yes to the question, Can I Keep My Home If I File Bankruptcy: Assuming your income does not disqualify you from filing a Chapter 7, you need to ensure that you do not have any equity in your home that exceeds your homestead exemption and the cost of potentially selling your house. What does “the cost of selling your house” do with anything? The bankruptcy trustee assigned to your case is looking for a property that can be sold to pay your creditors.

Therefore, here is a case scenario. Suppose you hypothetically have real estate worth $200,000. In that case, the trustee will factor in about ten percent of that value towards closing costs such as realtor commissions, tax prorations, title fees, transfer stamps, etc. So, if you have a mortgage with a $180,000 balance, it would not be worth it for the trustee to sell your property. This is because there would not be any funds left to distribute to your creditors after paying off the mortgage and the closing costs.

Furthermore, if you reside on the property, you can claim a homestead exemption of $15,000 for a single person or $30,000 for a married couple. This means that a bankruptcy trustee would likely not attempt to sell your home worth $200,000 unless you owed under $150,000 on your mortgage. So you could file a Chapter 7 Bankruptcy, continue to make mortgage payments, and keep your property while discharging other debt. Likewise, the same analysis determines how much money you must pay your unsecured creditors in a Chapter 13 bankruptcy petition.

Keeping Home While Reaffirming Other Debts

You can reaffirm your debts when you file for bankruptcy. There are pros and cons to reaffirming a debt. Whether it is for a mortgage or car loan, you should discuss your decision with an attorney before signing a reaffirmation agreement, if you plan to surrender your property through a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, then you would stop making mortgage payments. Let your creditor go through the foreclosure process to obtain possession of the property. If this is your intention, do not be alarmed when you receive a motion to modify the automatic stay or a motion to lift the automatic stay. These are formalities that your lender must go through so that they can obtain possession of the real estate you intend to surrender.

Qualifying For Mortgage After Bankruptcy: Reaffirming Home Loan After Bankruptcy

If you want to go off the discharge date after bankruptcy and not the housing event, you cannot go about reaffirming home loan after bankruptcy. Gustan Cho Associates specializes in helping borrowers get qualified for mortgages after bankruptcy, foreclosure, deed in lieu, and short sale. Gustan Cho and our licensed and support personnel at Gustan Cho Associates work alongside James Miller. The Team at Gustan Cho Associates Mortgage works with attorneys and paralegals of The Law Offices of Jamie Miller in helping families rebuild their lives after bankruptcy. We try to get them qualified for a mortgage and help them realize the dream of homeownership becoming a reality.

How Can I Qualify For a Mortgage after Bankruptcy

Here are the basic qualification requirements for securing a mortgage after bankruptcy. There is a two-year waiting period to qualify for an FHA Loan after a Chapter 7 Bankruptcy discharge date. There is a four-year waiting period to qualify for a Conventional loan after a Chapter 7 Bankruptcy discharge date. HUD, the parent of FHA and VA, allows borrowers to qualify for an FHA and VA loan one year into a Chapter 13 Bankruptcy Repayment Plan with the approval of the Chapter 13 Bankruptcy Trustee. There is no waiting period to qualify for an FHA, VA, or USDA loan after a Chapter 13 Bankruptcy discharge date. Still, it needs to be manually underwritten if the Chapter 13 Bankruptcy discharge has not been seasoned for at least two years after the Chapter 13 Bankruptcy discharge date, which is no big issue. Manual underwrites do require verification of rent, also referred to as VOR. Gustan Cho Associates is licensed in multiple states.

Qualifying For a Mortgage With a Lender Licensed in 48 States With No Overlays

We have a national reputation for being able to close loans in 21 days or less. Over 80% of Gustan Cho Associates borrowers are going through a major stressful loan process with a different lender. Many are having a hard time meeting their home closing date. Or have gotten a last-minute loan denial due to incompetence or because the loan officer did not properly qualify the borrower.

Gustan Cho Associates will close your home loan and closes 100% of all of its pre-approvals. We have no overlays on government and Conventional loans. Gustan Cho Associates offers NON-QM Loans. There is no waiting period to qualify for a mortgage after bankruptcy, foreclosure, deed-in-lieu of foreclosure, and short sale.

If you have any questions about reaffirming home loan after bankruptcy and qualifying for a mortgage after bankruptcy or during a Chapter 13 Bankruptcy Repayment Plan, please contact us at Gustan Cho Associates at 800-900-8569. Or text us for a faster response. You can email us at gcho@gustancho.com. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays.