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VA LOAN WITH TWO SUSPENDED LOAN DURING CHAPTER 13 REPAYMENT
Can I get approved for a VA loan with two suspended payments approved by the Trustee, almost one year into Chap 13?
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1 Reply
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It can be done to get approved for a VA loan during Chapter 13 bankruptcy. However, considerations and specific guidelines must be followed. Here are some key points as you’re a year into your Chapter 13 plan with two trustee-approved suspended payments:
VA Loan Eligibility During Chapter 13 Bankruptcy:
Approval of Trustee and Court:
You need the bankruptcy trustee’s and court’s approval to incur new debt – such as applying for a VA loan. The court will examine if the new mortgage fits your repayment plan and does not endanger your ability to meet obligations.
Payment History:
Typically, lenders require at least 12 months of on-time payments under the bankruptcy plan before considering a VA loan application. Although having two suspended payments may be startling, this could work in your favor because it shows that you followed proper legal channels by getting them authorized by the Trustee.
Lender Requirements:
Various lenders might have different requirements. Some may demand longer payment histories, while others may show leniency. This is especially true when financial stability is coupled with valid reasons for suspended payment(s).
Credit Score:
Lenders will still consider your credit score and overall financial situation. At the same time, the Department of Veteran Affairs does not set a minimum credit score. Most lenders want something between 580 and 620.
Residual Income:
VA loans mandate borrowers to satisfy residual income standards to have enough funds left after covering all significant costs.
Next Steps :
Consult Your Attorney: Discuss everything with your lawyer specializing in bankruptcies so that he or she can advise whether applying for this type of mortgage makes sense, given the current circumstances surrounding the approvals needed.
Speak with a VA-Approved Lender: Contact approved lenders who deal specifically with people going through chapter thirteen. These professionals will offer more tailored advice based on what’s happening in your case now.
Prepare Documentation: Have all necessary paperwork ready. This includes income-proofing materials showing payments made under the bankruptcy plan and approval(s) from trustees about suspending payment(s).
In conclusion, despite having two suspended payments one year into Chapter 13, it is possible to get still approved for a VA loan provided there is close consultation between an attorney well-versed in bankruptcies, the Trustee, and a lender who understands how VA loans work during bankruptcy.