Refinancing after a Chapter 13 bankruptcy

May 7, 2014 3:09 pm Published by

Many New Yorkers may file for Chapter 13 bankruptcy in order to pay back overwhelming debt through manageable payments. In order to free up some extra cash to pay off these debts, consumers may consider refinancing their home. Is this even possible after a Chapter 13bankruptcy?

It all has to do with timing. For a homeowner with a recent bankruptcy, refinancing may be next to impossible. However, there is the Home Affordable Modification Program, which allows homeowners to refinance while in the middle of a Chapter 13 bankruptcy. The request must be submitted to the lender of the current mortgage.

The chances of approval are greater a year or two down the line. For a Federal Housing Administration mortgage, the bankruptcy must have been finalized for at least one year. The homeowner must have paid all payments on time during that period. In addition, he or she must get permission from the court before refinancing. For conventional refinancing, the wait time is extended to two years. If the bankruptcy is dismissed, the wait time is four years.

While a bankruptcy does offer a fresh financial start, it does come with some challenges when trying to refinance a loan or apply for a new loan. In some cases, refinancing can mean an extended payment term, which means that consumers are in debt for a longer period of time. Obviously, lenders are concerned about consumers filing for bankruptcy and then drowning in debt again, so they may not be quick to approve this type of request. However, by repaying debts on time and showing responsibility, consumers can prove to lenders that they have learned from their money mistakes.

Source: FOX Business, “Bankrupt and Looking to Refinance Mortgage” Dr. Don Taylor, Apr. 29, 2014

facebooktwittergoogle_pluslinkedinmailby feather
Free Debt Consultation

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Associations & Memberships:
  • New York State Bar Association
  • National Association of Consumer Bankruptcy Attorneys
Rock County New York | Town of Stony Point | Town of Haverstraw | Town of Ramapo | Town of Clarkstown | Town of Orangetown

Ugell Law Firm, P.C.
151 North Main Street , 2nd Floor :: Suite 202 :: New City, NY 10956
Phone: 845-521-7841 :: Telephone: 845-213-1250 :: New City Law Office Map

Se Hable Español

Rockland County Bar AssociationMax Gardener's Bankruptcy Boot Camps | Lizmere South Mountain FarmNew York State Bar AssociationNational Association of Consumer Bankruptcy Attorneys