How does bankruptcy affect qualification for a mortgage?
How does bankruptcy affect qualification for a mortgage? Min Austria Assistant at Ascent Law LLC Bankruptcy is a legal procedure for individuals (and, in some cases, businesses) to get out of debt. The most common form of bankruptcy is Chapter 7, and the rules surrounding it have changed recently. In the past, Chapter 7 bankruptcies could affect qualification for a mortgage in several ways, but they can no longer disqualify you from getting one. Qualification for a mortgage is affected by bankruptcy if you file Chapter 7 or Chapter 13. The main issue that arises with bankruptcy is the loss of collateral. Bankruptcy law allows the debtor to keep certain assets so long as they are exempt and not included in their plan. These assets are usually exempt for all kinds of reasons. but most commonly it is because there is a legal obligation to provide for another person (like a spouse) or there is an important family purpose (like primary residence). If your bankruptcy plan does not include th...