Chapter 13 is where you set up payments with the court to a trustee. This typically takes place over 5 years. You will pay back a portion of what is owed to creditors. Chapter 13 stays on your credit report for 7 yrs.
Chapter 7
Chapter 7 is where you file bankruptcy through the courts, and dissolve all debt. This particular bankruptcy is looked at much more harshly with creditors and stays on your credit report for 10yrs.
Bankruptcy is usually the last resort when it comes to getting yourself out of a swamp of credit problems. I personally believe most people don't want to file bankruptcy but have no choice once they do. Usually bankruptcy is stemmed from lots of debt. There is hope though when it comes to buying a home. I will tell you real quick, you cannot buy a home while in a Chapter 7. Banks will not touch you with a ten foot pole, usually for 2 to 3 years. You can buy a home while in a Chapter 13, only if your trustee gives you permission.
Requirements to get a Mortgage while in Chapter 13
1. Must have permission from Trustee
2. Must have a lender willing to finance you FHA
3. Must have a minimum 12 month payment history with Bankruptcy.
4. Cannot have any late payments after bankruptcy is filed
5. Cannot have any collections after bankruptcy is filed.
6. Must have 3 alternate lines of credit.
A. Examples:
a. Letter from electric company stating you have been on time with payment for last 12 months
b. Letter from Phone Company stating you have been on time with payments for the last 12 months
c. Letter from any utility company stating you have been on time with your payments for the last 12 months.
If you are in a chapter 13, and you meet all these requirements you should be able to get financed FHA. The first thing you need to do is pull a recent copy of you free credit report, and make sure you have not had any collections or slow pays on your credit report during bankruptcy.
