When Colorado residents hit obstacles in their life, many are able to confront the challenges they face and move on. Of course, in order to move on, individuals cannot be bogged down with baggage left over from the challenge they just overcame.
In a person's financial world, for instance, obstacles are ever present, whether it be from a loss of income or an increase in expenses. Either of these challenges can cause a person to go into debt, which can hold the person back from future success until the debt is taken care of by the person.
Through Chapter 13 bankruptcy, individuals can overcome their financial obstacles by creating a repayment plan for all of their debt. The Chapter 13 repayment plan is affordable and manageable, which enables the person to finally pay off the debt and move on.
Yet, life does not stop after a person files for Chapter 13, as new challenges and opportunities become present along the way, sometimes even during the time of the repayment plan itself. For example, individuals might want to refinance the mortgage on their home if lower rates are available, but they may wonder whether they can do so because of a bankruptcy.
Typically, Chapter 13 bankruptcy will not automatically make a person ineligible from a FHA mortgage if one year has elapsed since the bankruptcy and the person has made their payments on time. The individual also must typically receive permission from the bankruptcy court for the new mortgage. A longer wait time of two years or more pay be in place for conventional financing.
Ultimately, there are options when a person desires a new mortgage or deals with other financial issues after a bankruptcy. The issues should be worked through with a bankruptcy attorney and possibly the bankruptcy court as well, depending on the circumstances, to ensure the person is on the right track and eligible for the new financing.
Source: Fox Business, "Bankrupt and looking to refinance mortgage," Dr. Don Taylor, April 29, 2014