Monday, March 25, 2024

Can You Do A Reverse Mortgage While In Chapter 13

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Despite A Past Bankruptcy Our Access To Programs Can Help You Get A Mortgage

Chapter 13 | can I refinance my home?

Bankruptcy cripples your finances and will make it difficult for you to find financing for a while. However, if you need to refinance or you want a mortgage on a new home, Midland Mortgage Corporation has access to bankruptcy-friendly loan programs. We will prepare you to secure the best rates for your mortgage as soon as funding is available to you. However, there are several issues affecting your access to the most popular programs.

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Why Using Chapter 13 Bankruptcy To Stop Foreclosure In Virginia Often Fails:

Five years is a long time.

Antonio and Rose filed Chapter 13 bankruptcy to stop foreclosure in Virginia back 2010. That worked. They made their five year Chapter 13 payments for three years. Then their oldest graduated from high school. At that point, they split up. They cant afford the Chapter 13 payment, cant afford the house, and dont really need the house now that the kids are gone. Theyre switching to Chapter 7. They will let the house go.

The same thing can happen if someone in the family gets sick. Or gets laid off. Or if an elderly relative now needs more care. Or if you get transferred to a distant city. If unpredictable life happens during the five year plan, it will probably fail.

If You Have Multiple Mortgage Loans

Under Chapter 13, a borrower who has multiple mortgage loan on the same house can get all but the primary categorized as unsecured debt. That means they go into the category thats covered by your ability to pay, and likely wont have to be paid back in full. This only comes into play if you owe more on the house than its worth.

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Ps For More Info On Danger Of Reverse Mortgage Foreclosure

What happened to Marian happens a lot. And not everybody moves fast enough to stop it. The Naples Daily News had this great article in 2019 about senior citizens in reverse mortgages who end up losing their homes in foreclosure.

Posted by Robert Weed / in Blog, Chapter 13, Chapter 13 Bankruptcy, Weekly Posts /

Annas Chapter 13 Payment Plan $891 A Month

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Nice Bob, the bankruptcy lawyer, put Anna in a chapter 13 payment plan. Chapter 13 is a payment plan. Nice Bob was able to get Anna approved for a Chapter 13 payment of $100 for 36 months. That was $3600 to clear $33,000 in debts.

Nice Bob also set a trap for the Mean Boys, LLC. Chapter 13 does NOT help a consumer who needs to reduce the payment on a lease.

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Take The First Step Toward Financial Freedom Contact Us

You dont need to continue to suffer under the stress and challenges that financial difficulties cause. We are here to help. Call us to discuss your options for filing bankruptcy in NJ or how we can help you save your home with a strategic foreclosure defense.

We offer free consultations and are available evenings and weekends. During your consultation you will sit down with one of our lawyers who will take the time to understand your unique situation and demystify the legal process for you. To schedule an appointment for your consultation with our bankruptcy attorneys and foreclosure defense and litigation team, call Levitt & Slafkes, P.C., at or contact us online using the form below.

Levitt & Slafkes, P.C.

Will You Receive Reverse Mortgage Payments During The Bankruptcy

Many lenders will stop making payments to you or will block your access to a line of credit when you file for bankruptcy because you’re taking on more debt with each payment. Ordinarily, the lender will resume payments after the bankruptcy case closes, but if you can’t wait, you can ask the court to allow the bank to make payments during the case.

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If Your Car Takes You To Work Your Chapter 13 Transportation Budget Will Be $65 A Month Short Every Month

If your car takes you to work, your Chapter 13 transportation budget will be $65 a month short, every month. Thats $780 short each year.

To put it differently, if you use a tank and a half of gasoline a week, driving to work , you have enough money left for insurance, but NO money for car repairs.

People with short commutes arent using a tank and a half. But for many people in the outer suburbs, thats low.

It cost me $1500 to get my Honda Civic through the safety inspection last month. My service rep said it was time to buy a new car.

A budget with no money for car repairs is ok, if you a driving a new car under warranty. No money for car repairs is awful, if youve got a hundred thousand miles on your car. And you have to get through a sixty month chapter 13 plan.

Car repairs dont come on a regular schedule At some point you need new brakes, new tires, a new transmission. And you will need them now!

Maybe youve saved some money, but since the bankruptcy court is taking ALL your projected disposable income, saving is tough.

At that point, youre choices are: skip the rent, stop eating for two months, walk to work. None of those work every well.

Recently, I proposed a chapter 13 plan, with a higher transportation allowance, each year of the five years, as the cars got older. I pointed that the Supreme Court said we should project virtually certain changes in a chapter 13, when calculating how much you had to pay the chapter 13 trustee, and how much you could keep.

How Reverse Mortgages Work

Chapter 13 Bankruptcy and Mortgage Payments

If you qualify based on age, income, equity and credit guidelines, reverse mortgages may allow you to live in your home for the rest of your life without having to pay the mortgage. You will still be responsible, however, for property taxes and property insurance payments each year. The balance of the mortgage will increase instead of decrease you would just not be responsible for it as long as you still reside in the property, maintain property taxes, insurance, and needed repairs. Your children or other heirs may still inherit the property, but they would likely have to refinance or otherwise pay off the mortgage owed on the property.

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Is Your Equity Withdrawal Safe

If you took your equity in a lump sum, and still have the money in a deposit account, it won’t be protected under the homestead exemption in most states. Or, in the best case scenario, it will be subject to the exemption for a short periodâtypically six months. If it’s not exempt under the homestead exemption, you’ll have to protect it under another exemption .

Chapter 7 Vs Chapter 13 Bankruptcy

Bankruptcy law is divided into chapters.

Most consumers file either a Chapter 7 bankruptcy, which discharges all qualifying debts immediately, or a Chapter 13, which sets up a three- to five-year payment plan to repay some or all of the debt.

Most mortgage lenders look more favorably on applicants who file Chapter 13 than those who file for Chapter 7.

Thats because Chapter 13 filers have made an effort to repay at least some part of their debts.

In fact, some mortgage lenders treat a Chapter 13 filing the same way that theyd consider a debt management plan through a credit counseling service as evidence that youre trying to fix your finances and fly right.

A Chapter 7 appears on a credit report for up to 10 years after the filing date, while a Chapter 13 must be removed in 7 years.

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Dont Try To Make The Decision Alone

You need a full, professional review of your entire financial picture before you can decide whether to proceed, with someone who will lay out all your options. Attorneys who are experts in foreclosure defense can be especially helpful.

Well do it for free. Call any time, day or night, to schedule your consultation.

Before Filing A Bankruptcy Petition

How long do you have to wait to buy a house again in Kentucky after a ...

Though bankruptcy filings are sometimes the best way to resolve debts, they are not the only alternative. Before deciding if you should file for bankruptcy, consider steps to resolve your debt. Then speak with an attorney to determine if bankruptcy is right for you. Each of these alternatives has its own set of pros and cons and only an attorney can advise you as to the best course of action in your particular case.

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Different Ways To File For Bankruptcy

Bankruptcy is a process in which the court decides what the best route is for a person with overwhelming debt to pay as much as possible, given their assets. The solution may be Chapter 7, which discharges debts but also liquidates assets though not all of a persons assets. Chapter 13 bankruptcy allows a person to keep their assets, but puts them on a strict repayment plan.

No matter which type you file for, the court puts an automatic stay on any foreclosure action. This means that if your house was being foreclosed on, that procedure will stop as the court sorts out your ability to pay. It doesnt mean, however, you automatically keep your house.

In both types of bankruptcy, there is a homestead exemption, a way to protect some of the equity you have built. Its another element of bankruptcy designed to make it more possible to keep your house. Each type of bankruptcy is a totally different process, but in each, the idea behind exemptions is that the person needs to protect some important assets in order to get by. There are also exemptions for keeping your car and other necessary items. The amounts vary by state, but the types of things you can exempt are limited to what you need to get by. Luxury items are not on the list.

You are required to have lived in a state, in that house, for 40 months, in general, to claim a state exemption. Check with your state rules to see what the details are.

To Stop Foreclosure In Virginia For Some People Loan Mods Work Great

Now, under government and public pressure, the banks have loan modification and foreclosure prevention programs. People five or six or eight to ten months, or more, behind on their mortgages cansometimesget a loan modification that brings them current, puts the late payments on the end of the loan, and even reduces the monthly payment.

Your legal tool to stop foreclosure in Virginia is bankruptcy. When you file Chapter 13, the law stops the foreclosure immediately. But you have to propose a plan to catch the house upand then you have to do it.

Those programs have helped a lot of peopleand they have let a lot of other people down. The banks have been forced to establish these programs. Forced by public pressure. Forced by Federal regulation. Forced by lawyers and judges. But the banks still run the programs, themselves. Its the banks, not a judge or legal authority, where you apply. Its the banks who accept you, or turn you down.

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Bankruptcy And Reverse Mortgages

A reverse mortgage is a loan based upon existing equity in your home and most are backed by the Federal Housing Administration. A significant amount of equity is necessary for this process. Significant usually means at least 50% loan-to-value rating. There are basically two types of reverse mortgages. One allows you to draw a fixed monthly amount, a line of equity credit, or a lump sum amount. The other type of reverse mortgage does not give you cash it merely allows you to stop paying your monthly mortgage payments. You may apply for a reverse mortgage if you aged 62 or older. Reverse mortgages technically differ from traditional mortgages in that the borrower has no direct liability for the loan, and the loan is not “due and payable” until after the original borrower dies. Lenders will take possession of the residence upon reported death and will sell same to recoup their monies. There will be no implications reportable to deceased’s probated estate. If the borrower has heirs who wish to retain the residence, the balance of the reverse mortgage must be satisfied in full. Be aware that reverse mortgage may come with high origination fees and usually require additional insurances and new house appraisals.

The merits of reverse mortgages will not be discussed here. The issue addressed is simply can someone with a reverse mortgage in place file for bankruptcy protection? The simple answer is yes you can. There are, however, three issues which must be addressed.

Conforming Loan With Chapter 13 Bankruptcy

Improve your credit during chapter 13 | mortgage refinancing

Its much tougher to get a conforming loan after Chapter 13 bankruptcy.

Fannie Mae and Freddie Mac the two agencies that set conforming loan rules are stricter than the government agencies. They will not allow borrowers to apply while working through a Chapter 13 plan.

Your bankruptcy must be either discharged or dismissed to qualify for a conventional mortgage. And theres a waiting period:

  • Two years after Chapter 13 discharge date
  • Four years after Chapter 13 dismissal date

Remember, discharge happens after you complete the 3- or 5-year repayment plan.

So altogether it could take up to 7 years after filing for Chapter 13 before you can get a conventional loan.

Filers who fail to complete the plan may have their bankruptcy dismissed. They probably still owe their creditors and will have to wait at least 4 years from the dismissal date before they can apply for conventional financing.

Filers with multiple bankruptcies in the past seven years will have to wait at least seven years from their most recent discharge before applying.

Extenuating circumstances

It may be easier to buy a house after Chapter 13 discharge if your bankruptcy was caused by extenuating circumstances.

Extenuating circumstances are typically one-time events outside your control that have a serious negative impact on your finances.

Examples include a severe illness or disability, a company layoff, or the death of the primary wage-earner.

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Getting A Mortgage While In Chapter 13 Bankruptcy

Being granted permission for a mortgage while in bankruptcy involves communicating your intentions with your bankruptcy trustee, and sometimes even requiring their approval. Our team at Peoples Bank Mortgage, along with your bankruptcy attorney can help guide you towards getting a home loan during your bankruptcy. The bankruptcy trustee will grant permission to incur any new debt . This typically happens after the trustee reviews your new monthly payment, and Pre-Qualification Letter.

The trustee will then investigate the request to ensure it is not fraudulent. If all aspects of the request are truthful and compliant, the bankruptcy trustee will evaluate the benefits of the request. Then your bankruptcy attorney will file a motion with the bankruptcy court. When the decision is finalized by the trustee, your attorney will inform you of whether or not, if your mortgage request was approved. In addition to this process, there are also further stipulations when working with a Chapter 13 trustee.

Keeping Your Home In Chapter 7 Bankruptcy

In a Chapter 7 bankruptcy, the court will liquidate most of your unsecured debts thats debt like credit card debt and personal loans, that isnt attached to an asset like a house or a car. Once that debt is out of the way, it should make it easier to make your mortgage payments.

If you cant pay your mortgage after bankruptcy, the result will be the same as not paying it before bankruptcy you eventually will lose your home.

If you know you are going to file for bankruptcy and want to keep your house, you can see if your mortgage lender would work with you on modifying your mortgage agreement in a way that would allow you to catch up on your payments. Do this before you file for bankruptcy. Once you file, the court takes over your assets and its out of your hands.

Here are some of the things that make it more likely your house will be protected if you file for Chapter 7 bankruptcy:

  • You are up to date on mortgage payments
  • All, or most, of your equity is protected with an exemption
  • You owe more on the house than its worth
  • You demonstrate to the court you can make your mortgage payments on time
  • You negotiate with your lender before you file for bankruptcy on a loan modification.

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Difference Between Manual Versus Automated Approved Underwriting

FHA and VA loans are the only two loan programs that allow manual underwriting. The noticeable difference between manual versus automated underwriting is the cap limits placed on manual underwriting. Mortgage underwriters have a lot of power and discretion when it comes to manual underwriting. Underwriters can use underwriter discretion in their decision on manual underwrites. Compensating factors are important in manual underwrites. Both FHA and VA loans require compensating factors when it comes to approving borrowers with higher debt-to-income ratios.

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