Can you refinance your home after filing banruptcy?

Answer 1

Refinancing While in BankruptcyMany people who have filed bankruptcy know little about the process. Often times debtors are unaware of their options in a chapter 13 because they rely on their attorney; their attorney has a fiduciary relationship with the debtor. A bankruptcy attorney's job is to know bankruptcy law, not the mortgage business or their guidelines. When a debtor files a BK 13 their main concern is having an automatic stay placed on a mortgage, collection, etc. To save their home from foreclosure. When entering into a plan the debtor, usually has no exit plan other than paying the 5 or 3 year plan (contingent upon median income). The debtor can refinance after 36 months (all unsecured claims become dischargeable debt) and discharge the bankruptcy immediately. This saves the borrower 2 years on their credit report. After refinancing, the BK 6 months out/discharged fannie Mae will issue approvals. A bankrupt borrower can easily be transformed to an AA+ 680-720 FICO borrower yielding rates in the range of 6.25-7.00 after doing a loan to discharge the bankruptcy.

In a dismissed bankruptcy a foreclosure bailout out loan can be arranged. This topic was discussed in a previous article I published in ezinearticles.com When a debtor is dismissed from his/her bankruptcy the mortgage ALONE can be refinanced and a Chapter 7 can be employed. When filing a Chapter 7 the mortgage must be refinanced first. I arrange foreclosure bailouts for people more frequently than previous years. When trustee or mortgage payments are missed the bank will make a motion to lift the automatic stay. This leaves the borrower exposed to foreclosure until the mortgage is refinanced. If the borrower meets the means test the non mortgage/secured debts can be discharged under a Chapter 7 Bankruptcy. The "means test" is when the court determines a debtors filing to be abuse of the system. Abuse is presumed if the aggregate current monthly income over 5 years, net of certain statutorily allowed expenses is more than $10K or is 25% of the debtors unsecured debts, as long as the amount is $6,000. The debtor can rebut this guideline with mitigating circumstances. A dismissal from a bankruptcy has been viewed by the court as mitigating circumstances.

When the payments to your trustee are not perfect you can still get out of your bankruptcy. If the debtor has filed multiple Bankruptcies it is important for debtor to know what claims are listed in schedule D & F (secured and unsecured claims) Often times when multiple liens are present the attorney will file an avoidance on a lien. This means the borrower is not required to pay the lien back. However, all too often title searches find liens that were never discussed or filed. Liens that maybe very old.

An unscheduled debt most of the time will not be discharged with a BK payoff because the claim was omitted or an avoidance was never filed. This is a common omission/oversight that can (depending on the amount of the claim) present a problem for a borrower who may not have enough equity to cover the lien.This is where having a through attorney pays off, you most likely wont have to deal with this predicament. Often times I can negotiate these debts down if they are addressed ahead of time.

Answer 2

Managed to keep the property through BK! Uncommon but also generally a sign there isn't much equity, especially in todays real estate market.

A loan does not have to be given by anyone, ever.

There are no prohibitions on giving a loan to someone.

Getting loans, especially in todays world as anything other than an excellent candidate is difficult. Loans made to even slightly "not excellent" candidates are exceptionally expensive...enough to prohibit most anyone that really can afford one otherwise to not do it.

Considerations...for you (and it certainly is for the loan officer):

Need is simple, repayment isn't.

He needs to have (more than enough) income to pay me back.

If trouble with expenses that should be taken care of by his income are involved in what he needs money for, as a loan isn't income of any type....it only increases expenses, it will only make his situation worse.

He may not have understood that the cash is entirely offset by the obligation and the income me the lender makes on it is an added expense to him, which is why he increased debt instead of reducing expenses/changing to an affordable lifestyle before. When he went in debt before, the debt didn't produce income for the creditors and it wasn't repaid.

Answer 3

Yes, BUT!!! FHA can be a good solution for refinance after having had a chapter 7 BK on your credit report. They require 2 years from the date of discharge for the BK and you must have reestablished some credit. Your credit file will have to be clean after the discharge.

I hope this helps and please feel free to email or call if you have any additional questions.

Answer 4

"It is possible to refinance after filing for bankruptcy. However, there must be a certain interval of time between refinancing and filing for bankruptcy that varies depending on the country you are filing in."

Answer 5

You should not have to, and you may not find a lender willing to do so. Watch out for scam artists. But if you can find a legitimate lender willing to refinance, go right ahead.

Answer 6

Legally, yes. In reality, no. For a zillion reasons. Get an attorney.

Answer 7

If a financial institution is willing to do so, but that depends on them knowing if you are filing bankruptcy or not. If they know, then your chances of a refinance are slim to nil.