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Buying or renting a home after filing a Chapter 13 petition

New Yorkers who are considering filing a Chapter 13 bankruptcy petition are frequently deterred by fear of the unknown. One of the biggest unknowns is the effect that filing a Chapter 13 petition - frequently called a wage earner or, more generally, a consumer bankruptcy - will have on a person's ability to buy or rent a home. The filing of a Chapter 13 petition does not ipso facto prevent a person from buying or renting, but the process often becomes more laborious.

In both situations, the filing of the bankruptcy petition impairs a person's credit rating, and that negative effect must be overcome in order to rent or buy. Realtors with experience in renting to bankruptcy filers recommend writing a letter to the prospective landlord explaining the circumstances that motivated the decision to file. Obtaining references from a boss or banker or other well-respected member of the community can also help. Any information that will shore up the prospective tenant's reputation as dependable is very helpful.

Buying a home during a Chapter 13 bankruptcy usually must await the approval of debtor's payment plan by the court and the passage of one year during which the debtor has made all required payments on time. The buyer must also obtain the written permission of the bankruptcy court to enter into the mortgage transaction. The FHA frequently approves federally insured loans if the borrower can demonstrate that he or she has met the conditions stated above.

Anyone considering filing a Chapter 13 petition and wondering about its effect on housing arrangements or other debt transactions may wish to consult an experienced bankruptcy attorney. A knowledgeable bankruptcy attorney can provide advice about approaching a landlord or applying for a mortgage loan.

Source: realtor.com, "After Filing for Chapter 13 Bankruptcy, Can You Still Rent or Buy a Home?" Jeanne Spicer, Sep. 19, 2017, accessed on Sep. 24, 2017

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