Refinance After Bankruptcy – How Does Your Bankruptcy Affect Home Mortgage Refinancing?
There are a few basic concepts one should know when looking into refinancing a mortgage after a bankruptcy. Most importantly, you need to know the two different types of personal bankruptcy that you can declare.
Chapter 7 Bankruptcy, often called straight bankruptcy, is an attempt for someone financially overextended to liquidate most of their assets to satisfy creditors, keeping only a few personal assets needed for the basic necessities of life such as an economical car, personal clothing, etc.
In Chapter 13 Bankruptcy, your assets are not liquidated. Instead, you come to an agreement with an appointed trustee where late charges and other penalties are eliminated and you start a payment plan to repay much of the debt owed. This process can take over a year or two, but will allow you to retain belongings (and property). Also, it is looked at more favorably by lenders because you are attempting to repay your debts, not just write them off. Lenders will look at both the date the bankruptcy was filed and when it was discharged.
A Chapter 13 Bankruptcy buyout...
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