Chapter 13 Bankruptcy In Tennessee Mortgage Guidelines

This BLOG On Chapter 13 Bankruptcy In Tennessee Mortgage Guidelines 
This article was written about chapter 13 bankruptcy in Tennessee. Tennessee, a landlocked state located in the south of United States has a population of 6.716 million. The musical heritage of the state stretches from the Grand Ole Opry in Nashville to the Beale Street in Memphis. Eight Fortune 500 Companies are located in Tennessee including the global giant of logistics, FedEx. Tennessee got its nickname ‘The Volunteer State’ during 1812’s war when volunteer soldiers from the state displayed marked courage in the Battle of New Orleans.

Real Estate Market of Tennessee

Real Estate Market of Tennessee
Home value in Tennessee is lower than most of the other states of the U.S. The median home values have risen by 7.6 percent in the last one year and it is expected that they’ll increase 3.7 percent more within 2018. Currently, the median home value in the state is $148,300. The median price of homes that are currently listed in the Volunteer State is $225,900. Tennessee has one of the lowest cost of living in the country while also offering a variety of big-city conveniences and natural, isolated retreats. Tennessee is an excellent destination to invest in real estate since it is close to the Appalachian Mountains, the Tennessee River, national sports teams, and top-rated institutions.

Chapter 13 Bankruptcy in Tennessee

In the past mortgage lenders automatically rejected applicants who filed a Chapter 13 Bankruptcy, but this is not the case anymore. In Tennessee, now mortgage applicants can qualify for a mortgage during the chapter 13 bankruptcy in Tennessee or after it. So, if economic conditions have pushed you into filing for a bankruptcy, it’s not the end of the world for you and you can still qualify for a mortgage for a new home in Tennessee.

In a chapter 13 bankruptcy, a debtor files a 3-5 year repayment plan to creditors, promising to pay off all or part of the debt with future income.

Certain long-term obligations (such as a home mortgage), alimony or child support debts, certain taxes, debts for most government-funded or guaranteed educational loans or benefit overpayments, and debts arising from death or personal injury caused by driving while intoxicated are not discharged in chapter 13.

How Does Chapter 13 Bankruptcy Work?

How Does Chapter 13 Bankruptcy Work?

Chapter 13 Bankruptcy is good for those people who have a job and wish to keep their assets. In Chapter 13 Bankruptcy, a bankruptcy trustee is appointed by the court to structure a repayment plan and provide the petitioner with a new payment plan that is affordable. The petitioner will be required to pay either all his/her debts or a part of it over the period of three to five years.
The difference between chapter 7 and chapter 13 bankruptcy in Tennessee is that in Chapter 7 Bankruptcy, all the debts are eliminated and all assets are liquidated to pay the money to the creditors. With a Chapter 13 Bankruptcy, a person can keep their assets and pay off the debt with his/her income. Therefore, chapter 13 bankruptcy is beneficial for those who have a consistent income. If a petitioner does not have a consistent income, then he/she will not be eligible for Chapter 13 Bankruptcy as creditors must be paid with a percentage of income every month.

A wage earner’s plan is another name for a chapter 13 bankruptcy. It allows people with steady income to create a plan to pay off all or portion of their obligations. Debtors offer a repayment plan to creditors over the course of three to five years in this chapter.

A Chapter 13 bankruptcy can last up to ten years on your credit report, and you will lose all of your credit cards. If you don’t already have a mortgage, bankruptcy makes it nearly impossible to receive one. You’ll get a discharge order after you finish your Chapter 13 repayment plan, which will wipe out the remaining sum of qualified debt.

Chapter 13 Dismissal

If during Chapter 13 Bankruptcy, the petitioner loses their job and cannot continue work due to medical reasons and cannot make monthly payments, then the payment plan will have to be restructured again. In this case, the trustee can ask the court to see if the debts that petitioner owns to creditors can be discharged due to his/her financial hardships. If the court denies, then the Chapter 13 Bankruptcy will have to be converted into Chapter 7 Bankruptcy and the petitioner will lose his/her assets.

If the Chapter 13 plan is dismissed, creditors may immediately begin or continue state court litigation to foreclose on the petitioner’s property or garnish their wages under applicable state law. When a bankruptcy case is dismissed, the bankruptcy is declared null and void.

  • Letters of collection
  • Calls from collection agencies or departments
  • Lawsuits for debt collection
  • Repossessions
  • Foreclosures

However, everything is not lost. Consumers can avoid creditors by paying on time and in full.

Qualifying for a Mortgage with a Chapter 13 Bankruptcy in Tennessee

Qualifying for a Mortgage with a Chapter 13 Bankruptcy in Tennessee

A petitioner can qualify for a mortgage while he/she is working through the Chapter 13 Bankruptcy repayment plan. Mortgage lenders do approve borrowers who file for Chapter 13 Bankruptcy in Tennessee for FHA loan and VA home loan. However, they won’t approve if one year hasn’t passed into the bankruptcy or if the petitioner did not make the required payments on time.
Permission of the trustee is required to qualify for a mortgage under Chapter 13 Bankruptcy. The trustee will need approval from the bankruptcy court and then he/she will figure in the new payment plan. After the petitioner has been discharged from Chapter 13 Bankruptcy, he/she can qualify for FHA loans and VA home loans and there is no waiting period. However, some mortgage lenders do require a waiting period of two years after Chapter 13 Bankruptcy is over. This is not the FHA guidelines or VA guidelines.

It would help if you were at least 12 months into your Chapter 13 repayment plan to qualify for an FHA loan. You must have made all of your payments on time as well. Furthermore, the bankruptcy court or your bankruptcy counsel must provide you written permission to obtain a new mortgage loan.

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