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Obtaining a mortgage after a Chapter 13 bankruptcy

No one enjoys admitting that they have financial problems; however, residents in Massachusetts and elsewhere should not pretend that they do not exist when they are occurring. Doing so tends to generate an even larger issue. Thus, it is important for debtors to get a good picture of what options are available to them so action can be taken to address his or her debt problems. In most cases, filing for bankruptcy is the next best step.

For those owning a home or seeking to protect certain assets or property during the bankruptcy process, it is typical to file for Chapter 13 bankruptcy. This is considered a debt reorganization process, and it helps the filer stop the foreclosure process and even the repossession of certain items, such as a vehicle.

While filing for bankruptcy is a real and effective resolution for many, it is also a process that generates many concerns about the future. For instance, if a person filed for Chapter 13, will he or she have problems obtaining a mortgage in the future? In cases where a filer placed an application with a mortgage lender during the Chapter 13 process, it is likely that the lender will approve the loan application. However, if the Chapter 13 process has been completed, it is suggested that the filer wait a year or two so they could qualify for a mortgage without issue or delay.

Filing for bankruptcy should not feel like a financial death sentence. Bankruptcy is actually a right afforded to citizens, and the process is designed to help U.S. residents obtain a fresh financial start following a financial disaster. Thus, if a person takes immediate action to address his or her financial problems through bankruptcy, it is often the case that their credit score will be in better shape than a person who attempts to work through their financial problems without the help of bankruptcy.

Depending on your situation and the timing of your application, you may qualify for a mortgage with a Chapter 13 bankruptcy on your record. There are also government-backed loans that have certain guidelines to meet but no additional criteria to get approved. Lastly, there are alternative loans for Chapter 13 borrowers; however, their costs are higher and lenders assume extra risks.

Filing for bankruptcy is never an easy decision to make, but no matter what choice you make, it is important to understand how this process could impact you. Talking to an attorney experienced in bankruptcy law could help you navigate this process and answer any questions you might have.

Source: Themortgagereports.com, "Mortgage With A Chapter 13 Bankruptcy," Mark Cappel, Nov. 22, 2016

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