Can You Refinance After Bankruptcy? (2024)

FAQs

How soon after bankruptcy can I refinance? ›

Conventional Loans

With a Chapter 13 bankruptcy, the waiting period is 2 years after discharge if you have a conventional loan, but the bankruptcy must have been filed more than 4 years from the time your credit is pulled.

Yes, it is possible to get a personal loan after bankruptcy, but the process can be challenging, and you may receive less favorable loan terms than you would have before.

You won't be able to tap the equity in your home immediately after filing for bankruptcy. Lenders generally require a waiting period of between one and five years from discharge or dismissal — and up to seven following foreclosure — before they'll approve you for a home equity loan.

It's possible to get a mortgage after bankruptcy is dismissed or discharged. However, there is usually a waiting period before you can apply for another mortgage.

One of the most attractive benefits of refinancing during Chapter 13 bankruptcy is the ability to consolidate your debts. By leveraging the equity in your home, you can do a cash-out refinance to pay off some or all of your existing debts.

You will only get approval from a Chapter 13 trustee or administrator if the property or services for which you hope to get a loan are necessary and reasonable purchases, and repaying the new loan will not interfere with your ability to make Chapter 13 payments as planned.

Yes. The limit is based on the bankruptcy exemptions you're claiming on your Schedule C. Some states have specific exemption laws to protect account balances. If your state has a specific exemption law for bank accounts, the most important thing to check is how much of your bank account balance it protects.

Once you're discharged from your bankruptcy there's no legal limit on borrowing money but you'll find it much harder. It'll be difficult for you to apply for a loan or other credit, such as an overdraft, during the six-year period following your bankruptcy.

Personal Loan Alternatives After Bankruptcy

Credit card: Secured credit cards and other credit cards for bad credit can give you a line of credit to borrow against when you need to, all while helping you build your credit score along the way.

What disqualifies you from getting a home equity loan? ›

Most lenders require you to have at least 15% to 20% equity left in your home after factoring in the new loan amount. If your home's value has not appreciated enough or you haven't paid down a big enough chunk of your mortgage balance, you may not qualify for a loan due to inadequate equity levels.

Bankruptcy remains on your credit report for up to 10 years. However, it's possible to begin improving your credit soon after bankruptcy if you work hard and develop responsible habits. As time passes and you continue making smart money moves, the impact of the bankruptcy on your credit will lessen.

The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).

The law states that credit reporting companies may not report a bankruptcy case on a person's credit report after ten years from the date the bankruptcy case is filed or discharged.

Conventional Mortgage

Chapter 7 must be dismissed or discharged 4 years prior to application for a conventional loan. In the case of conventional loans with a Chapter 13 bankruptcy, you must wait 4 years from the date of filing and 2 years from the date of discharge before applying for a conventional loan.

Generally, you must only wait one year from the date of your Chapter 13 discharge to qualify for an FHA loan. However, you may be able to get an FHA loan while you are still making Chapter 13 payments. You can do this by consistently making on-time payments for a full year and obtaining court approval for the loan.

The Fair Credit Reporting Act is the law that controls credit reporting companies. The law states that credit reporting companies may not report a bankruptcy case on a person's credit report after ten years from the date the bankruptcy case is filed or discharged.

Taking Out Loans Prior to Filing Bankruptcy

If a creditor sees a loan taken out shortly before you file bankruptcy, it looks like you intended to defraud the creditor – borrowing with the intent to discharge it in bankruptcy can get you sued. The court could order you to pay it back.

At the end of the plan, some of your debt balances can be discharged, meaning you don't have to pay the remaining bill. You will, however, have to continue making any payments that are due on your mortgage.