Michigan debtors who are considering filing for Chapter 13 bankruptcy may want to know if purchasing or renting a home would be feasible. Because Chapter 13 bankruptcy can remain on a person’s credit for years, obtaining a home can be difficult. However, it would not be impossible.
Chapter 13 bankruptcy can be used by individuals who want to pay their debts but are unable to meet their obligations in the short term. People with a stream of income, an unsecured debt total that is less than $394,725 and secured debts that are less than $1,184,200 are eligible to file for Chapter 13. In the United States, Chapter 13 bankruptcies make up a third of all filings.
Although it can be challenging, Chapter 13 bankruptcy filers may still afford a home. Individuals seeking a rental can submit a letter to the property owner explain their financial situation in the best light and how the bankruptcy occurred. Letters of recommendation from a current landlord or notable member of the community may also be helpful.
Chapter 13 filers may also be able to purchase a home, even if it can harder than renting one. Depending on their circumstances, filers could get a home within a year of filing. The Federal Housing Administration may be the best choice for a mortgage for bankruptcy filers. Lenders are able to approve a mortgage insured by the FHA if the filers are able to demonstrate certain qualifications, such as they have been making required payments on time and permission has been granted by the bankruptcy court to obtain a mortgage.
Individuals considering bankruptcy should speak with an attorney to determine what type may be appropriate for their financial situation. The attorney may recommend Chapter 13 to address credit card debt with manageable payments.