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CHAPTER 7 BANKRUPTCY
At least two years must have elapsed since the discharge date of the borrower and / or spouse's Chapter 7 Bankruptcy, according to FHA guidelines. This is not to be confused with the bankruptcy filing date. A full explanation will be required with the loan application. In order to qualify for an FHA loan, the borrower must qualify financially, have re-established good credit, and have a stable job.
CHAPTER 13 BANKRUPTCY
FHA will consider appoving a borrower who is still paying on a Chapter 13 Bankruptcy if those payments have been satisfactorily made and verified for a period of one year. The court trustee's written approval will also be needed in order to proceed with the loan. The borrower will have to give a full explanation of the bankruptcy with the loan application and must also have re-established good credit, qualify financially and have good job stability.
I also, am attempting to refinance after a chapter 7. Trust me....no one will look at you under 3 years of discharge. If you are going FHA, then green light. Otherwise, I've done the work, trust me...3 years min. Last year, was different story...
The confusion between 2-years and 3-years waiting period is based on FHA guidelines which differentiate between actual bankruptcy discharges and delinquencies to the federal government.
So, Chapter 7 for example, under 4155.1 4.C.2.g (of HUD guidelines), a minimum of 2 years waiting needed (amongst other requirements). The banks can tack on whatever they want on top of it to see creditworthiness. Note: Chapter 13 rules are different.
But if there has been a delinquency on a federal loan (like a previous FHA loan), then under 4155.1 4.A.2.g, there is a three-year waiting period.
As a general matter, even if after two years of Chp 7 discharge, the creditworthiness cannot be established, lender can require additional time to see if you are good on your current payments.
Hope this helps.
Raheel Shahzad, Attorney, CPA, Real Estate AgentChicago, IL*above is not legal advice but general information; your facts and jurisdiction may be different*
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