ReFi in Bankruptcy - Posted by Terence

Posted by byron thompson on April 04, 2006 at 17:46:23:

I’m currently in a bankruptcy and recently divorced. i’d like to refi my house so that i can afford to pay my bills and child support. i have a good job. I just need a second chance. is there anyone who can help. i live in St. louis Missouri.

ReFi in Bankruptcy - Posted by Terence

Posted by Terence on July 16, 2005 at 11:19:58:

Is it possible to do a refi while a homeowner is in bankruptcy, most likely not. If so then what are the steps they will have to do, to accomplish this.

Thank you for any info offered

Re: ReFi in Bankruptcy - Posted by John

Posted by John on July 16, 2005 at 13:08:11:

I am a loan officer, and work these on a regular basis. It is called a BK Buyout. It is done to use equity to payoff creditors and get the homeowner out of Bankrupcy. It does need trustee approval and usually 12 months minumum in BK. The rates are not pretty, but not as bad as you would think. The last one I did was 8.99 fixed 30 year with 526 score and 90% LTV. Job history, credit score, and payment history in BK are what is required as well as equity in property.

Re: ReFi in Bankruptcy - Posted by Devon Daughety

Posted by Devon Daughety on July 16, 2005 at 12:32:59:

I think I have heard of one lender doing this, but the rate is so astronomically high, that it wouldn’t make sense to do this. Obviously they’re having a hard time paying their bills, why would they want to refinance to most likely a WAY higher rate and get stuck with a higher house payment that they will probably have trouble paying?? Your best bet is to wait until it is discharged. Then they can refi.

Re: ReFi in Bankruptcy - Posted by Valerie

Posted by Valerie on July 16, 2005 at 11:27:40:

Yes,Terence it is possible. I am a L/O and refinance people in BK. Alot depends on credit scor nad payment history during the BK.

Re: ReFi in Bankruptcy - Posted by sarah jefferson

Posted by sarah jefferson on July 07, 2007 at 13:46:16:

I would like to know can a person refi while they are in bankruptcy. If so how long do they have to be in it.

Re: ReFi in Bankruptcy - Posted by docniss

Posted by docniss on July 17, 2005 at 08:32:11:

I have a friend that is tin the processes of filing bankruptcy and they have been L/O a house for several years…They made a really bad decision in this agreement. They put up a $10,000 down for the option and none of thier rent goes toward the purchase price. Now they are filing bankruptcy and since this is a 2 bedroom house and they had a 2nd kid last winter…guess what the house is too small so they want out. I told them they either have to suck it up and lose their money or buy the house and then re-sell it, but the bankruptcy thing is there. What is the likliness of them getting a loan to buy this house? They live in Indiana. Any recommendations I could pass on to them? Thanks

Re: ReFi in Bankruptcy - Posted by Max-Va

Posted by Max-Va on July 07, 2007 at 20:30:41:

Yes, It is called a “BK buyout” The amount of time in bankruptcy varies. It depends on the trustee. The trustee will allow it or not.

Re: ReFi in Bankruptcy - Posted by michaela-ATL

Posted by michaela-ATL on July 17, 2005 at 12:02:43:

Do they have more equity in the house, than the 10K?
If the house is a deal, couldn’t they try to sell it and do a double closing? Of course, that might be difficult, if the new buyer has a mortgage Company, as they don’t like to do that. But maybe the price is low enough, where they could find a cash buyer? Or maybe a sandwich lease?


Re: ReFi in Bankruptcy - Posted by John

Posted by John on July 17, 2005 at 09:29:36:

I am sorry but I really can’t help here. I am also not familar with Indiana BK laws. It would depend on the contract and how it was written. If it was a lease with option, seperate transactions, they are not on title or have equitable title, a refi is not possible, it would be a purchase. A purchase is not possible until BK is discharged. If they have equitable interest in the property as in contract for deed, or been given rent credits, they would have some ownership rights. A refi might be possible. From your description it would seem they do not.
It would seem like walking is the only option they have, unless they have a large equity position between FMV and option price. If they do a HML or investor may buy their option.
Just curious what other debt made them file BK?
Sorry I can’t help more