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The # 10 reason for choosing to file a Chapter 13 bankruptcy is that future (re)financing of a home and opportunities for future credit may be brighter.
In the current economic climate, finding financing at all may be difficult even for people with
excellent credit. A chapter 13 debtor may find that it will be easier and quicker to finance a home
purchase or to refinance a mortgage obligation after having completed a repayment plan under Chapter
13 than if that same debtor filed Chapter 7.
In past years, some lenders were willing to extend
financing to provide home purchase money at competitive rates if a debtor had been in Chapter 13 and
made every payment under the plan to the trustee in full and on time for a 12 month period. In many
instances, if a debtor instead filed Chapter 7, the debtor could have to wait at least two years
after his or her Chapter 7 discharge before he or she can qualify for the same financing.
It should
be noted, that on the other hand, some debtors also find that lenders are more willing to provide
almost any other type of financing (such as motor vehicle and credit card offers) much more quickly
after a Chapter 7 discharge and be completely unwilling to consider such financing while a debtor is
in Chapter 13 as they focus their attention on when a debtor receives his or her discharge (which is
usually three to four months after filing a Chapter 7 versus three to five years after filing a
Chapter 13).
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