Having a Texas bankruptcy in your past doesn’t mean that being a Texas homeowner isn’t is not an option in your future. Many Texas bankruptcy mortgage applicants that suffered a bankruptcy are able to get a Texas bankruptcy mortgage after they reestablish a credit and or repayment history. Texas bankruptcy mortgage lenders know that no applicant is perfect and have processes in place to make home ownership possible. In fact, when faced with severe financial problems, individuals who file for bankruptcy often fare better in the years that follow than those who don’t file. A Federal Reserve Bank of New York Study showed, people who filed incurred less damage to their credit score and ended up in better financial shape in the years that followed compared to those who didn’t.
The main factors in getting approved for a home loan after Texas bankruptcy in Texas are the type of home loan being applied for, and credit history post-Texas bankruptcy.
Under a Texas chapter 13 bankruptcy, a debtor proposes a 2-5-year repayment plan to the Texas creditors offering to pay off all or part of the debts from the debtor’s future income. You can use Texas Chapter 13 to prevent a Texas foreclosure; make up the missed car or Texas bankruptcy mortgage payments; pay back taxes; stop interest from accruing on your tax debt (local, Texas state, or federal); keep valuable non-exempt Texas property (see Texas exemptions); and more. If you can stick to the terms of your Texas chapter 13 repayment agreement, all your remaining dischargeable debt will be released at the end of the Texas bankruptcy plan (typically three to five years). The amount to be repaid is determined by several factors including the debtor’s disposable income as is usually determined as part of the Texas Means Test. In addition, the total amount paid to Texas creditors under the Texas Chapter 13 plan must also be at least as much as creditors would have received if the debtor filed a Texas Chapter 7 bankruptcy. To file Chapter Texas 13 bankruptcy you must have a “regular source of income” and have some disposable income to apply towards your Texas Chapter 13 payment plan.
Texas Bankruptcy Timelines and Seasoning Periods
In the Texas bankruptcy mortgage industry, different Texas bankruptcy mortgage lenders each have their own pre-determined “seasoning periods,” which determine how much time must pass after a Texas bankruptcy mortgage before someone can be considered for a home loan.
Filing for Texas bankruptcy mortgage in Texas can be less of a hindrance compared to Chapter 7, with subsequently shorter seasoning periods. This is because the key difference between the two types is that includes a plan to pay back at least a portion of the debt, rather than Chapter 7 which does not contain a repayment plan.
In Texas bankruptcy proceedings alone can take as long as nine months before the negotiation between the debtor or the debtor’s counsel and the creditor is complete. The start of a seasoning period is based on how quickly the Texas District Bankruptcy Court can finalize your case and start your bankruptcy plan.
How Soon Can You Get a Texas bankruptcy mortgage after Bankruptcy?
Many people think they have to wait seven years after before they can get a Texas bankruptcy mortgage. This isn’t true. The myth comes from the fact that records must be removed from your credit reports after seven years. The main issue is whether or not your lender has experience with Texas bankruptcy borrowers in Texas and what their seasoning periods are.
Context Matters with Texas Bankruptcy
This shorter time frame is especially true when the individual filed for Texas bankruptcy due to an economic event or extenuating circumstances. What counts as Texas bankruptcy mortgage-lender verified extenuating circumstances? Typically, extenuating circumstances are when the events are resolved, unlikely to happen again, and were beyond the individual’s control. In Texas, with several recent hurricanes battering the coast, including Hurricane Matthew and Hurricane Irma, many Floridians may qualify for these considerations. Other events such as a company-wide layoff, major illness or injury or the death of a wage-earning spouse can qualify.
Government-backed Loans and Assistance in Texas Following
Filing for Texas bankruptcy in Texas doesn’t exclude you from the benefits of government-backed home loans, such as FHA, VA and USDA loans. These government backed home loans typically have shorter seasoning periods following than conventional loans. Low- to medium-income prospective buyers who’ve filed for can obtain a low to no money down Texas bankruptcy mortgage for a USDA home in rural Texas communities. Additionally, if you are still making repayments, that doesn’t mean you can’t get a Texas bankruptcy mortgage after bankruptcy in Texas. To be eligible for an FHA home loan while still making payments, it must be 12 months since the start of the your proceedings, all plan payments must have been paid on time. Further, you must receive permission from the bankruptcy court handling the case to apply.
Texas bankruptcy mortgage Foreclosures
Even nearly a decade after the recession, Texas still struggles with high rates of home foreclosures. Seasoning periods after a foreclosure, either as part of a Texas bankruptcy filing or separately, can be up to seven years, but contacting an experienced mortgage lender as many borrowers don’t know the exact rules surrounding when the clock starts to get them info a new home.
If you filed for Texas bankruptcy and faced foreclosure at the same time, the seasoning period can occur at the same time. Meaning if you faced both, you do not have to wait the two years for the bankruptcy filing and then also the seven years for the foreclosure. Once again, being able to prove the foreclosure or foreclosure alternative was beyond your control, such as a hurricane or other extenuating circumstances, may shorten the time frame.
Rebuilding Your Credit to Buy a Home in Texas
The seasoning period doesn’t have to be seen as a barrier, instead consider it an opportunity to rebuild your financial foundation. Texas can cause a hit to your credit score. Regardless of being out of the official seasoning period, potential home buyers should still try to improve their credit score.
Those steps include ensuring payments are made on time, related to Chapter repayment plans as well as any other money owed, as well as using secured credit cards and other financial products responsibly. Like anyone else, Floridians who’ve filed should pull their credit reports regularly to ensure accuracy.
Texas doesn’t have to be the end. It was built to help Americans rebuild their lives following a financial disaster. The goal of owning a home in Texas can still be part of your American dream. Get on the path back to home ownership. Contact a trusted bankruptcy mortgage company that understands all the steps involved, and can help get you on the right track.