Refinance After Bankruptcy

To refinance after bankruptcy can be a difficult task, but beneficial because the formerly bankrupt individual is attempting to get lower interest rates and save money on loans. If a person has been through a bankruptcy, they may be able to sit down with their lender and explain the situation. The lender may be accommodating and refinance the loan in order to ease the individual's financial situation, providing that they have been current on payments. If the debtor would like to refinance with a different lender, they should do research and try to find one that is willing to work with people who have bankruptcy in their credit history.

Even though the debtor's credit has sustained a considerable blow, there is still hope for refinancing. Since the person is not allowed to go bankrupt again for another six years, they are not as bad a credit risk as one might think. The debtor may be allowed to refinance after bankruptcy if the market value of their home has not declined substantially since the time of purchase. It also must be a well-secured investment for the mortgage holder. In the 2005 real estate market, most areas of the United States are seeing steady increases in the market value of property. However, if the consumer sincerely wants or needs to refinance, now would be the perfect time before interest rates continue to climb, as they are forecast to do.

When considering one's refinancing options, it is important to gather documentation showing how much the consumer will be able to pay each month. The lender will want to verify income and substantiate job security. It is a good idea for the debtor to obtain a letter from the current employer testifying to their dependability and level of job performance. The lender will more likely extend the option to refinance after bankruptcy if the consumer can document these things along with any probable raises and if the employer can attest to the longevity of the consumer's position.

Also, debtors need to gather Chapter 11 or 13 papers showing which debts were discharged or other documents that will confirm that he or she has no other long-term debts. After the consumer has collected all the necessary paperwork, they should contact the mortgage holder and set up a time to meet with them. It will be a challenge to refinance after bankruptcy, but definitely worth the effort. Individuals should be honest and be positive, "... for with God, all things are possible." (Mark 10:27)

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