Going through Chapter 13 bankruptcy may seem to close off financial options such as refinancing your home mortgage. However, this is not necessarily the case. Refinancing your mortgage may be possible, and at a time sooner than you think.
According to U.S. News and World Report, you might be able to refinance your home at different times following your bankruptcy or even before you have completed it.
During Chapter 13
To refinance your mortgage while under bankruptcy protection, you need approval from various parties, not just your lender. Your bankruptcy judge and your trustee may believe that mortgage refinancing could make it harder for you to fulfill your repayment plan and will not allow you to pursue it.
You will probably require evidence that changes in your mortgages will reduce your financial hardships and help you pay your debts. This could win approval from your bankruptcy court and trustee.
After bankruptcy is complete
Following Chapter 13 bankruptcy, there is a waiting period before you can refinance a mortgage, but it will depend on different factors. If a court dismissed your bankruptcy filing, your waiting period could last four years at least, though special situations may reduce it to two years. If you have successfully completed bankruptcy, your period could likewise be just two years.
However, your waiting period could lengthen to five years if you have filed bankruptcy multiple times in the last seven years. In fact, you may not be able to qualify for any home loan during this time.
Finally, be aware that your lender will probably have requirements for bankruptcy filers to qualify for mortgage refinancing. Knowing the timelines of bankruptcy and your lender could help you figure out when you have a chance to alter your mortgage.