Chapter 13 bankruptcy, also known as a “reorganization” bankruptcy, is a type of bankruptcy in which a debtor’s assets are not sold off but they are required to repay their creditors over a period of 3-5 years according to a court-approved repayment plan.
In a Chapter 13 bankruptcy, the debtor is typically allowed to keep their assets, including their home. However, they are required to make regular payments to a bankruptcy trustee, who then distributes the payments to the creditors. Once the debtor has completed the repayment plan, any remaining debt is discharged.
The length of time it takes to qualify for a mortgage after a Chapter 13 bankruptcy is typically 2-4 years from the date of discharge or from the date of completion of the repayment plan.
However, some lenders may offer a mortgage loan to a borrower that has filed for a Chapter 13 bankruptcy, as soon as they have received a discharge or completed the repayment plan.
It’s important to note that bankruptcy laws vary by state and it’s best to check with a local attorney or housing counselor to get a better understanding of the laws in your state.