Although it may seem intimidating, bankruptcy can provide Virginia residents with options for addressing excessive debt that has accrued because of different types of life circumstances. In some cases, the mismanagement of finances can lead to unmanageable debt. However, many individuals and families find that the loss of a job or a serious medical condition can have a negative impact on the ability to pay bills. A common concern is how bankruptcy will affect one’s financial dealings in the future, especially in situations such as refinancing a home.
The rules related to refinancing after filing for Chapter 13 bankruptcy can change frequently, which makes it important to discuss any specific questions and plans with a bankruptcy attorney. The rules for Freddie Mac and Fannie Mae mortgages can differ from those for FHA mortgages. A wait time of at least two years after bankruptcy is in place for those with mortgages guaranteed by Freddie Mac or Fannie Mae. Those with bankruptcy cases related to unplanned financial issues such as job loss or medical scenarios are subject to that two-year period, but the wait is at least twice as long for those whose bankruptcies occurred because of poor financial management.
In some cases, people in the midst of bankruptcy may be able to refinance their home loan. However, this is viewed as new debt in spite of the fact that the amount owed may not change. This action requires court approval and is best approached with the assistance of a bankruptcy attorney.
Prior to filing for bankruptcy, an individual might consult an attorney to determine whether there are other options for reorganizing finances. The credit counseling that is required as a condition of filing could provide insight about alternatives.