Filing for bankruptcy may allow you to eliminate or restructure your debts. It may also provide temporary protection against repossession or foreclosure. However, seeking protection from creditors in a Michigan bankruptcy court may also hinder your ability to refinance any loans not impacted by your case.
How long does it take to refinance a loan?
If you file for Chapter 7 bankruptcy, most of your unsecured debts are eliminated in a matter of weeks or months. Even if you own property such as a home or a car, there is no guarantee that it will be taken to satisfy your unsecured debt obligations. In most cases, you’ll need to wait at least a year after a Chapter 7 case is discharged before you can refinance a mortgage. However, it may be possible to refinance a car loan sooner than that if you can find a lender willing to work with you.
What’s the process of refinancing a loan while in bankruptcy?
If you file for Chapter 13 bankruptcy, it may be possible to refinance a loan before your case is discharged. In such a scenario, you would first need to find a lender willing to extend credit. After doing so, you would take the terms of a proposed to refinance loan to the bankruptcy court for approval. Assuming that you obtain approval, you then begin the process of closing on the deal.
A bankruptcy case will likely have a profound impact on your finances both now and in the future. However, there is a chance that you’ll be able to renegotiate the terms of any loan that you remain liable for after your case is discharged. This may make it easier to make future payments in a timely manner, which may help improve your credit score.