Bankruptcy Question on Home Refinance Application?

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I’m Filling out a form 1003, to refinance my home. One of the questions asked on the application is “Have you been declared bankrupt within the past 7years”. I filed a chapter 13 in 2001(mortgage not included). It was discharged in 2006, but due to an error it should have stopped in 2004 so i was refunded for 2 years trustee payments. My credit reports are all clean, no signs of a past bankruptcy,and perfect payment history. I’ve read if it asks” have you ever filed” you should say yes. Can the question “Have you been declared bankrupt within the past 7years” be answered No since it doesn’t show on my credit report? Do bank loan officers have other ways of looking at past history?

  1. Reply
    May 16, 2011 at 11:37 pm

    Mortgage lenders use a version of credit report weighed for mortgages. It is different than the consumer version you would get.

    Better to list the bankruptcy and explain that it should have discharged in 2004 instead of 2006, than to omit the bankruptcy and have them come asking you about it.

  2. Reply
    May 17, 2011 at 12:06 am

    2004 is within the last 7 years. Bankruptcy should remain on your credit report for AT LEAST 7 years. Some bankruptcies remain for up to 10 years. By YOUR words, the answer in this case is YES. That said, a 4 year old bankruptcy with a clean history afterward would not prevent you from refinancing. The the TRUTH (say yes) and you will be fine.

  3. Reply
    May 17, 2011 at 12:58 am

    You must answer YES anything else is fraud

  4. Reply
    May 17, 2011 at 1:10 am

    I would argue that you can answer ‘No’.

    You were ‘declared’ bankrupt when you filed, back in 2001. The time after that was just the repayment period. It’s true the bankruptcy is still an open case until it is officially closed, but you declared bankruptcy in 2001.

    Also, your bankruptcy trustee is actually your best credit reference. They are a federal official that can vouch you successfully completed your Chapter 13 plan. Go ahead and tell your lender you filed for bankruptcy in 2001 and if they need to know more tell them they may contact your trustee or attorney if they have further questions.

    To sum up, I would say 2001 is the important date here, not the 2006 or 2004 dates. All repayment plans can vary in length and should not be considered.

  5. Reply
    May 17, 2011 at 1:25 am

    The correct answer to this question is “no.” The relevant date is the FILING date, not the discharge date. Your FILING date is more than seven years ago.

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