With interest rates low and home values rising, you may be considering refinancing your mortgage. But can you do this if you are in a Bankruptcy or are considering filing? The good news is that it is possible to refinance your mortgage loan while in an active bankruptcy. However, you will need to seek the court’s approval before the agreement and finding a lender can represent an obstacle for those who are already in an active bankruptcy.

When you file for bankruptcy, your credit score takes a hit and as a result finding a new lender who will work with you on a refinancing agreement may not be super easy. To help with this step, you will want to have a recent copy of your credit report and proof that you are current on your Chapter 13 plan payments. You can give these pieces of documentation to lenders to see if they will consider working with you. Once you have found a suitable lender, a motion will need to be filed and approved by the court before you will have permission to take on the new debt.

If you are interested in preparing and filing such a motion, our office will need from you copies of
the loan paperwork showing the terms of the new loan. If you are trying to take cash out through your refinancing, the court will likely require that you turn over any surplus loan proceeds to the trustee so that they may use these funds to pay your creditors. This may permit you to conclude your case earlier than expected by paying off 100% of your unsecured debts. If you are considering this, please contact your attorney so they can look at the circumstances of your case and advise accordingly.

Are you looking at bankruptcy, but want to refinance your mortgage loan in the near future? To see how we can help you today, please feel free to reach out to your Yuba City bankruptcy attorney at (530) 797-4402.

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