Buying your own home is exciting. Gaining the independence and freedom to own and manage a property how you like, and eventually have an asset to enjoy in the future, is something many of us aspire to. However, if you have been made bankrupt you might be wondering how long after bankruptcy you will have to wait until you can get a mortgage. In a Chapter 13 case, you’ll make payments through the court for three to five years to pay down or pay off your debt. You don’t have to wait until two years after the bankruptcy to apply. In fact, you don’t have to wait the bankruptcy is over. As long as you’ve made your Chapter 13 payments on time for a year, you can qualify for an. Dear Bankruptcy Adviser, I filed a Chapter 7 bankruptcy that was discharged in I was paying my second mortgage loan to the bank for 4 years without a reaffirmation agreement.
Related videosHow Long After Bankruptcy Can I Buy a House?
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Dear Bankruptcy Adviser, I filed a Chapter 7 bankruptcy that was discharged in I was paying my second mortgage loan to the bank for 4 years without a reaffirmation agreement. I never failed to make a payment during that time. I recently learned the bank wrote off that loan and transferred it to a credit collection agency, which I have not heard from.
If the bank wrote off the loan, it means the loan is defunct, right? Does it also mean the collection agency cannot legally do anything since I completed my bankruptcy? Dear Mike, Great questions, but you are not clear on a few crucial issues. I get this question a lot, and while I know you are just hoping to have some equity in your house, you still have to deal with the second mortgage. You are right that the second mortgage lender cannot sue you. Because you received a discharge in your Chapter 7 bankruptcy and you did not reaffirm the loan, the lender no longer has the right to sue you to enforce its loan.
You had to reaffirm the loan while your bankruptcy was active in order to re-establish liability. However, this is the important part of what you may not understand. When you received the first and second mortgage loans, the lender placed a lien against the house for each loan. You have to pay both loans to own the home free and clear.
In some states, the lender can sue you for failing to pay on either or both loans. To remove the liens, you must pay the loans. In your case, the lender may or may not have written off the loan.
It is also possible that the lender merely sold the note to another company. However, the transfer of the loan to the new company does not bring new liability. You are still protected from lawsuits because you received your Chapter 7 discharge and did not reaffirm the loan. The new company can only foreclose on the property for failure to make monthly payments. This could be good news now that the loan is with the new company.
You may be in a good position to negotiate either a reduced monthly payment or a settlement on the loan balance. Is your credit mortgage-ready? Get your free credit score to find out at myBankrate. You may be able to settle the outstanding balance for a little more than what the company paid to get your loan from the bank. This removes the lien from your property and eliminates the rest of the remaining balance.
So while the lien still exists, the transfer of the note from 1 company to another could be great news for you. Call them and see what settlement or payment options are available. Read more Bankruptcy Adviser columns and more stories about debt management. The content is broad in scope and does not consider your personal financial situation.
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