Refinancing during bankruptcy is possible but challenging. It involves meeting with a bankruptcy attorney, finding a creditor, creating a budget plan, filing a motion in bankruptcy court, and getting trustee approval. It can be used for home payments, cars, boats, and other assets.
It is not always easy to refinance during bankruptcy, due to your already damaged credit, but the process is not impossible. By meeting with your bankruptcy attorney, researching mortgage companies, creating a budget plan, then going to bankruptcy court again and getting a trustee’s approval, you can lower your monthly payments. Commonly, this technique is used to facilitate home payments, but it can also be applied to cars, boats, and other assets.
The first step in refinancing during bankruptcy is to meet with your bankruptcy attorney. He or she will have your full financial history and will be able to provide you with information and recommendations on the best refinancing options for you. Not everyone who is bankrupt will be eligible for refinancing programs, so it is important to provide all necessary materials and documents to the attorney.
If your attorney believes you are qualified to refinance, your next step is to find a creditor willing to work with you. Your financial history is not optimal for lending money, so creditors may be difficult to locate to refinance during bankruptcy. Contact banks and commercial lending organizations and ask the loan officer on duty if they work with clients who are currently bankrupt. If you’re lucky enough to find multiple lenders willing to work with you, compare each organization’s rates and terms to find the best way to lower your monthly payment.
Most bankruptcy filers should work out a budget plan with their attorney. Once you have located a lender, meet with your attorney again and discuss the possible impact of this refinancing during the bankruptcy proceeding. This is an opportunity for you to revise your budget plan to reflect the change in your monthly payment.
Then, you must file a motion in bankruptcy court. Your attorney will likely handle this part of the refinancing. Please note that there is a court cost involved in a motion that will be added to your monthly bankruptcy payments.
Finally, you will need to make another trip to court after you have contacted the bankruptcy trustee handling your case. This person will first review your new budget plan to make sure it complies with all laws and regulations. In court, he will be asked to show that he has the financial means to refinance during bankruptcy. If the judge and the trustee approve it, your process will end and refinancing will be allowed.
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