Can I Purchase a House While in a Chapter 13 Bankruptcy?

Aug 05, 2011 8 Comments by

While in a Chapter 13 bankruptcy, you must get permission from the bankruptcy Trustee to incur any new debt. This includes a mortgage if you want to purchase a new house. When you are serious about buying a new home within a Chapter 13 bankruptcy, you should let your bankruptcy lawyer know. They will get in contact with the Trustee for you and let him or her know that you would like permission to incur debt. They will file a motion with the court for this. Once the trustee makes a decision, the attorney will let you know.

Young Family with Children in Front of Home

Obtaining a new mortgage while in the middle of a Chapter 13 bankruptcy may be difficult, depending upon your situation. The longer that you are in a Chapter 13 bankruptcy and making your monthly payments on time, the more likely a lender will be willing to give you a better interest rate in a mortgage. Be prepared to shop around a bit. There may be some lenders who will not give a new loan to someone who has recently filed a Chapter 13 bankruptcy. Be patient, we find a lot of our clients will get pretty decent mortgage rates about a year and a half to two years after filing bankruptcy.

Also beware that many people have to have a decent amount of money up front for the purchase of a house. That may be for a down payment on the home or for closing costs. The bankruptcy courts are going to want to know where you came up with that money. If you have been able to save that amount over time then they may feel the need to increase your monthly Chapter 13 payments. Most of our clients get the money from the support of family.

If you are interested in getting a new house while in a Chapter 13 bankruptcy you need to contact your bankruptcy lawyer. They will help guide you through the process and will be able to let you know whether they think the bankruptcy judge will approve your Motion to Incur Debt so you can get the financing necessary to purchase the home.

After You File, Bankruptcy, Bankruptcy Video Vault, Chapter 13, Duncan Law Blog, Video
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About the author

At Duncan Law, LLP our goal is pretty simple. We try to make people's lives better. And in doing so we try to treat people the way we would want to be treated. It's just that simple.

We practice primarily in the areas of bankruptcy and workers' compensation. We have offices in Charlotte, Greensboro and Winston-Salem, NC.

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8 Responses to “Can I Purchase a House While in a Chapter 13 Bankruptcy?”

  1. Caveat Emptor Lawyer Network, August 8th, 2011 says:

    […] Carolina bankruptcy lawyer Duncan Law writes that, while buying a home during a Chapter 13 bankruptcy may be difficult, it is possible if (1) you can find a lender who will give you a loan, (2) you can […]

  2. Linda lightner says:

    I understand what you are saying that it will be hard, do u think that I might need to have a consign just in case. But I never had a home. I am in cht13 bankruptcy, I will be finishes in a year and six months. There are people out there calling me telling me they can erease that bankruptcy and three other things off my credit. Please advise me

  3. Damon Duncan says:

    Three things:

    First, don’t trust the folks who are calling you. They can’t do anything you can do on your own.

    Second, if you are currently in a Chapter 13 bankruptcy you should contact your attorney to get specific instructions because you likely need to get court permission before getting any financing.

    Third, a cosigner will probably help you obtain a loan and keep the interest rate as low as possible. I’m not sure it would be a good deal for the person doing the cosigning but it will certainly help you get the financing if that is the direction you choose to head. Good luck!

  4. matthew king says:

    I have a question I filed a 13 1 year ago I am in a 3 year plan I really wanna buy a house I am paying g 1100 a month for a two bedroom townhouse I make a lot of money a year.about 90000 do u think I can get a loan n how much do I need down..and roughly wut are the usual interest rates…

  5. Damon Duncan says:


    I appreciate your question but is so difficult to answer it with any kind of accuracy. There are a lot of factors that go into your interest rate, including your FICO credit score. You probably could get a loan but it’s probably going to have a very high interest rate if you just filed a year ago. Ideally, you would like to get two years outside of when you filed the bankruptcy – that’s when your credit starts improving. You also will likely have to get the court’s permission before they allow you to purchase a new home. If it were me, I would try to wait until you are out of the bankruptcy before getting a new home. I think you will have a better credit score then, can get a better interest rate and won’t have to worry about going in front of the court. Just my $0.02.

  6. Elba says:

    I have been in chapter 13, and I went to dealer today to get a paper quote, for the trustee. However the lender that approved me said I had to choose a car year 2015 or higher and non of the dealers that work with the lender have the car I want in that year, and they said it was because of the law in NC. Is This true??

  7. Damon Duncan says:

    That’s not correct. You can get financing for a vehicle more than a year old. They want you to get a newer car because it helps them make more money, typically.

  8. Jazzy says:

    Do you know generally if the lender approves the mortgage loan how long does it usually take for the trustee to approve a new mortgage once requested?

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