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To obtain a loan within one year after the discharge, the borrower must show that "the bankruptcy was caused by extenuating circumstances beyond his or her control and has since exhibited an ability to manage financial affairs and the borrower's current situation is such that the events leading to the bankruptcy are not likely to recur." FHA regulations also specify that a borrower still in a Chapter 13 debt adjustment who has satisfactorily completed one year of plan payments and gets court approval of the transaction. [U.S. Department of Housing & Urban Development, Office of Housing, Handbook No.: 4155.1 REV-4 CHG-1, September 28, 1995. Chapter 2-3, E] VA has similar regulations. The VA handbook for lenders includes provisions that "If the bankruptcy was discharged more than 2 years ago, it may be disregarded." If the discharge was between 1 and 2 years, the guarantee may still be granted if the applicant or spouse has obtained consumer items on credit subsequent to the bankruptcy and has satisfactorily made the payments over a continued period and the bankruptcy was caused by circumstances beyond the control of the applicant or spouse such as unemployment, prolonged strikes, medical bills not covered by insurance, etc. VA regulations allow granting of the loan guarantee to a person in a Chapter 13 when the plan payments are finished satisfactorily, or after 12 months payments and the Trustee or the Bankruptcy Judge approves of the new credit. [Veterans Benefits Administration VA Pamphlet 26-7, Change 34, November 13, 1997] If you obtain home loan financing with a loan guarantee, the loan rate should be based on the guarantee status of the loan. As a result, I would not expect that the rate would be affected by the bankruptcy. Other effects of bankruptcy on credit are difficult to assess. Credit is extended by individual lenders, and is not generally regulated by law. Lenders do not generally make their criteria public. We do know that there are two factors which are important to creditors in extending credit. Ability to make payments. Any lender will want to be sure that you have the ability to pay back a loan before extending you credit. The discharge in a bankruptcy should improve your ability to make payments. You will no longer owe the debt that you did when you filed, and you will no longer be subject to judgments, garnishment and other collection activities which would impair your ability to pay back the new loan. In addition, the restriction against you filing a Chapter 7 for 6 years from the filing of your previous case may give the creditor some assurance of their ability to collect new debt. Credit history. Lenders look at the way you have paid your bills in the past as an indication of how you will pay your bills in the future. A bankruptcy is an adverse rating in this respect, but creditors can also see how your credit was before the circumstances which caused the bankruptcy. If you had a good credit history and paid your bills on time before the bankruptcy, you may find that it is easier to re-establish credit than if you were perpetually behind on your payments and had judgments against you.

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doney ...

by buttaz_69

2 years ago

Asker's Rating: 

How could you qualify for any loan if you are in Chapter 13? Think about it, would you lend money to someone who just filed a legal paperwork maneuver to get out of paying money they owed someone else?

by Thin Kaboudit- 2 years ago