How to Refinance a Home during Chapter 13 Bankruptcy

If you are filing bankruptcy under Chapter 13 you can request the option to refinance your home. Chapter 13 bankruptcy is your petition to the court for relief from your debt load when you are no longer able to make the required payments. Most of the time, the court will allow you to refinance your home in order to keep a place to live. If you recognize that you are in financial trouble in time before you get to the point of declaring bankruptcy, it will generally be much easier for you to qualify for a refinance on your mortgage. When your petition for bankruptcy is approved by the court you will be appointed a trustee over your finances. This can be an attorney or other financial appointees. With their help, you can make application for a refinanced loan on your property. The instructions below are very easy to complete. Follow them and you will know how to refinance your home during Chapter 13 bankruptcy proceedings.

Step 1: You will need to retain the services of an attorney who specializes in or handles bankruptcy cases. He would be able to give you the answers you need for making a decision on refinancing. He will list options for you and he will be able to take you through the process option that you select.

Step 2: Start calling lenders to find out what you need to do to apply for a refinance loan. There are lenders that specialize in loans for debtors in bankruptcy proceedings but finding them can be difficult. Most lenders consider someone filing for bankruptcy too great a credit risk. Chapter 13 Bankruptcy is an option where an appointed trustee will help you restructure your debt and help you make better decisions for paying off the creditors. Lenders are aware that if you are unable to meet the conditions set by the court in the Chapter 13 bankruptcy proceedings that you will be filing Chapter 7 Bankruptcy to totally discharge the debts. The lender has to weigh this possibility of future discharge of the debt against your ability to repay the new loan.

Step 3: You will need a budget plan. The attorney will help you with this process if you do not understand what you must do or how to do a budget. It will need to be realistic and will need to show the new finance amount for your mortgage. Your court-appointed trustee will have to approve the option to refinance. If you get more income, you will be required to pay it toward your debt repayment plan.

Step 4: Your attorney will use all the information to file a motion in the bankruptcy court. There will be fees to pay for the filing in addition to the money you pay for the attorney services. The attorney or the court will tell you the amount of the filing fees. You can add this to the payout plan the court sets up for your Chapter 13 Bankruptcy repayment plan.

Step 5: Remember you must have the approval of the trustee to refinance. You may have to take documentation to court for the trustee to review and consider the new budget plan you and your attorney have made. You need to be prepared to provide the amount the lender will charge for the refinance and how you intend to pay those charges. You cannot add these charges to your bankruptcy plan so you will have to use donations from some source to make these payments. You can use money from your income tax refund if you have a refund due. You just cannot use your earned income because those funds are already obligated to pay down your debts. How the debtor is going to pay for the costs will be addressed. These costs cannot be added to the plan, so they have to come from other sources such as tax refunds or gifts.