Dec 12, · If you can't afford to pay your bills, bankruptcy can help you discharge your debts and start over. As soon as the bankruptcy case is closed, you can sell any of the assets you still own, including your home. However, selling your home after bankruptcy may be problematic if you plan to by a new one. You can sell your house after your bankruptcy discharge. However, you must re-invest the proceeds in another home within six months. Otherwise, the trustee can sell your house and pay your creditors. Consult an attorney as to the specific facts of your case. Dec 19, · It is important to point out that selling your home after bankruptcy may be problematic if the plan is to immediately turn around and buy a new home. Once the bankruptcy is complete and you still own your home, the lender can choose to initiate or move forward with foreclosure proceedings if the mortgage is in default.
Life has thrown them a curveball, however, that has left them struggling to pay off their past debts. Sometimes, filing for bankruptcy is the only way out of a crushing financial situation, and taking this step can really help cash-strapped individuals get back on their feet. And yes, many go on to buy a home eventually, despite the challenging credit score that results from bankruptcy.
But how? Being aware of what a lender expects after a bankruptcy will help you navigate the mortgage application process efficiently and effectively. There are two ways to file: Chapter 7 bankruptcy and Chapter 13 bankruptcy. With Chapter 7 bankruptcy, filers are typically released from their obligation to pay back unsecured debt—think credit cards, medical bills, or loans extended without collateral.
With Chapter 13 bankruptcy, filers have to pay back their debt. However, the debt is reorganized and a new repayment schedule established that makes monthly payments more affordable.
A bankruptcy attorney can help determine if Chapter 7 or Chapter 13 makes the most sense for your specific situation. Unfortunately, both Chapter 7 and Chapter 13 bankruptcies will adversely affect credit scores. But don't give up, hopeful home buyer. Most people applying for a loan will need to wait two years after bankruptcy before lenders will consider their loan application.
That said, it could be up to a four-year ban, depending on the individual and type of loan. The FHA loan , on the other hand, has a minimum one-year ban in place after a bankruptcy. These bans, or seasoning periods, are typically shorter with government-backed loans such as FHA or VA loans than with conventional loans.
The time is measured starting from the date of discharge or dismissal of the bankruptcy action. Generally, the more time between debt discharge and the loan application, the less risky a once-bankrupt borrower looks in the eyes of a mortgage lender. Consider the trustee's response.
If he does not object to your exemption and determines that there are no assets with sufficient equity for him to sell, he will abandon your assets. According to the Bankruptcy Law Network, this happens in about 95 percent of cases. The trustee files a "No Distribution Report," which effectively discharges your case. Receive the court paperwork that officially discharges your bankruptcy.
Your home is now free of the Chapter 7 and you once again hold the legal title to your home. Appoint a real estate agent to list the property and negotiate with potential buyers in the usual way. By Jayne Thompson. Trustees do this when they've sold everything there is to sell and abandoned any remaining property. Until you receive a copy of this report, the trustee can come back and take assets, but only if you owned them at the time you filed.
Beverly Bird is a practicing paralegal who has been writing professionally on legal subjects for over 30 years. She specializes in family law and estate law and has mediated family custody issues. Reviewed by: Michelle Seidel, B. What Happens if the Trustee Abandoned an Asset?