can i get a va loan with a bankruptcy

June 25, 2023

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Yes, it is possible to get a VA loan even if you have filed for bankruptcy in the past. While a bankruptcy can impact your credit score and financial history, it does not automatically disqualify you from obtaining a VA loan. However, it is important to note that lenders may have specific requirements and waiting periods after bankruptcy before approving a loan. Generally, a waiting period of two years after the discharge of bankruptcy is required, and you must also demonstrate responsible financial behavior during that time. Consulting with a VA-approved lender can provide you with more specific information and guidance on your eligibility for a VA loan after bankruptcy.

What is the waiting period for a FHA bankruptcy?

What is the waiting period for a FHA bankruptcy?
FHA Loan Waiting Period After Chapter 7 Bankruptcy
After receiving a Chapter 7 bankruptcy discharge, you must wait for two years before applying for an FHA loan. This waiting period starts from the date of your discharge. During these two years, it is essential to focus on enhancing your credit score, avoiding late payments, saving additional funds, and overall improving your credit profile.

What is the difference between Chapter 11 and 13?

Chapter 11 and Chapter 13 bankruptcies have distinct differences. In Chapter 13, the debtor must repay their debts within five years, while Chapter 11 allows for an extension beyond this timeframe.

Another distinction lies in the payment obligations to creditors. In Chapter 13, the debtor is required to pay priority debts, such as specific taxes and family support debts, in full (100%). However, they may not have to fully repay unsecured creditors. The debtor must allocate all disposable income for a period of 3-5 years, and any remaining funds are distributed proportionally among unsecured creditors. In many cases, these creditors receive minimal or no payment.

In a typical Chapter 11 case, the Absolute Priority Rule comes into play. This rule states that if the debtor or their owners wish to retain estate property, they may be obligated to pay unsecured creditors the full amount owed over time. The court may extend the repayment period beyond five years if it deems it reasonable.

However, there are instances where debtors can avoid this requirement by contributing substantial new value to the estate. This contribution must be significant enough to justify the debtor retaining valuable assets without repaying unsecured creditors.

Is Chapter 11 good or bad?

Is Chapter 11 good or bad?
Understanding bankruptcy is crucial, especially during difficult economic times. Directors and officers of distressed companies may be hesitant to consider bankruptcy due to its negative connotations and potential damage to reputation, credit, and self-image. As a result, they may be overly optimistic when communicating with suppliers, customers, lenders, and employees, avoiding any mention of bankruptcy. However, when faced with dwindling liquidity, near-term maturities, and potential covenant breaches, a reorganization bankruptcy (Chapter 11) may be a preferable option to liquidation in Chapter 7.

A Chapter 11 reorganization offers numerous benefits for troubled companies. It provides much-needed relief from unsustainable debt levels, allows for the unraveling of burdensome contracts, and provides breathing room to develop a plan. Once a debtor and its creditors agree on a plan to reorganize the business, the company receives a fresh start with a new balance sheet that aligns with current operational realities.

Understanding the hidden agendas and shifting motivations of both debtors and creditors is essential for anyone who may experience bankruptcy in the future. This includes being part of the management team leading a distressed company, a vendor with unpaid invoices from a company entering bankruptcy, or an investor seeking an opportunistic bargain.

Do you lose everything after a bankruptcies?

Do you lose everything after a bankruptcies?
By Cara ONeill, Attorney

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Don’t worry, you won’t lose everything in bankruptcy. Most individuals can retain household furnishings, a retirement account, and some equity in a house and car during bankruptcy. However, luxury items like fishing boats or flashy cars may be at risk, and you may have to pay to keep them. To avoid costly surprises, it’s important to understand:

1. How exemption laws protect your property.
2. What happens to items that cannot be protected.
3. Where to find your state’s exemption laws.

Once you have a grasp on this topic, it’s recommended to familiarize yourself with other important aspects of filing for bankruptcy. You can also take our quick ten-question bankruptcy quiz, which can help you identify potential bankruptcy issues quickly.

If you need background information, here are some resources to consider:

1. Learn about the differences between Chapter 7 and Chapter 13 bankruptcy.
2. Determine if you qualify to eliminate debts through Chapter 7 bankruptcy.
3. Discover why Chapter 13 may be a more effective solution than Chapter 7.

Remember, seeking professional legal advice is crucial when dealing with bankruptcy.

Is your credit bad after bankruptcies?

FICO scores are influenced by various factors, and having more negatives will result in a lower score. Monitoring your FICO score has become easier with banks and credit card issuers regularly providing updated scores on their secure websites. Alternatively, you can request free reports annually from the three major credit rating bureaus, although it may not be as immediate.

If you already know your score and file for bankruptcy, be prepared for a significant drop. Someone with an average score of 680 would lose between 130 and 150 points, while an individual with an above-average score of 780 would lose between 200 and 240 points. Both individuals would then be considered risky borrowers, making it challenging or even impossible to obtain loans or unsecured credit.

However, if your score is in the 400s or 500s when you file for bankruptcy, there is a possibility that your score may actually improve. Some individuals in this score range have experienced credit score boosts of up to 50 points after filing for bankruptcy.

Bankruptcy filings typically fall under either Chapter 13 or Chapter 7 of the federal bankruptcy code. Chapter 13 stops collection actions and establishes a repayment plan for borrowers to partially repay creditors over a fixed number of years. On the other hand, Chapter 7 does not involve a repayment plan and eliminates most unsecured debts, preventing creditors from recovering what they lent.

One drawback of filing for Chapter 7 bankruptcy is that it will negatively impact your FICO score for a period of 10 years. On the other hand, a Chapter 13 filing, which involves partial repayment, remains on your record for seven years after receiving a Chapter 13 discharge or dismissal.

The impact of bankruptcy on your credit score will also depend on the amount of debt discharged and the ratio of positive to negative accounts on your credit report. This is because significant credit score factors such as late payments and credit card utilization will be reset.

Conclusion

What is the waiting period for an FHA bankruptcy?

The waiting period for an FHA bankruptcy varies depending on the type of bankruptcy filed. For Chapter 7 bankruptcy, the waiting period is typically two years from the discharge date. However, if extenuating circumstances can be proven, such as a job loss or medical emergency, the waiting period may be reduced to one year. For Chapter 13 bankruptcy, the waiting period is typically one year from the start of the repayment plan, as long as the borrower has made all payments on time and has received permission from the bankruptcy court to enter into a new mortgage.

Conclusion:

In conclusion, the waiting period for an FHA bankruptcy depends on the type of bankruptcy filed. Chapter 7 bankruptcy requires a waiting period of two years, while Chapter 13 bankruptcy requires a waiting period of one year. It is important to note that these waiting periods can be reduced under certain circumstances, such as proving extenuating circumstances or obtaining permission from the bankruptcy court. It is advisable for individuals who have filed for bankruptcy to consult with a mortgage professional to understand their options and determine the best course of action for obtaining a new mortgage.

Is your credit bad after bankruptcies?

Bankruptcy can have a significant impact on an individual’s credit score and overall creditworthiness. A bankruptcy filing will remain on a person’s credit report for a number of years, depending on the type of bankruptcy filed. Chapter 7 bankruptcy will typically remain on a credit report for 10 years, while Chapter 13 bankruptcy will remain for 7 years. During this time, it can be challenging to obtain new credit or loans, and any credit that is extended may come with higher interest rates or less favorable terms.

Conclusion:

In conclusion, bankruptcy can have a negative impact on an individual’s credit. The filing will remain on the credit report for several years, making it difficult to obtain new credit or loans. However, it is not the end of the road for individuals who have filed for bankruptcy. With time and responsible financial behavior, it is possible to rebuild credit and improve creditworthiness. This can be achieved by making timely payments, keeping credit utilization low, and maintaining a positive payment history. It is important for individuals who have filed for bankruptcy to be patient and proactive in rebuilding their credit. Seeking guidance from a credit counselor or financial advisor can also be beneficial in navigating the process of rebuilding credit after bankruptcy.

Is Chapter 11 good or bad?

Chapter 11 bankruptcy is a complex and costly process typically used by businesses to reorganize their debts and continue operations. It allows businesses to develop a plan to repay creditors over time while remaining in control of their operations. While Chapter 11 can provide businesses with an opportunity to restructure and regain financial stability, it is not without its drawbacks.

Conclusion:

In conclusion, whether Chapter 11 bankruptcy is good or bad depends on the specific circumstances of the business and its ability to successfully reorganize and repay its debts. While Chapter 11 can offer businesses a chance to recover and continue operations, it is a complex and expensive process that requires careful planning and execution. It is important for businesses considering Chapter 11 to consult with legal and financial professionals to fully understand the implications and potential outcomes of this type of bankruptcy.