Qualifying for a Mortgage with a Chapter 13 Bankruptcy in Tennessee

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Chapter 13 Bankruptcy in Tennessee

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

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.

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.

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.

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.

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.

If you have been denied a home loan or have any questions about real estate or mortgage please contact the author, Matt Herbolich, MBA, JD, LLM by phone or text at 786.390.9499 or by email at mherbolich@usa-mortgage.com. Mr Herbolich works when you work, so feel free to contact him any time

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