After Chapter 13 discharge, any rules?

[bbeagle]

I'm awaiting my Chapter 13 discharge in a few weeks.... (it's been such a long 5 years!)

Anyways, what I'm wondering is if there are any other rules/restrictions after I receive the discharge.

I've noticed that:

• I can't refinance or purchase a house through normal means for another 2 years. (I know I could possibly get an FHA loan)
• I can't take money out of my house for 2 years - like through a Home Equity Loan.
• Bankruptcy will appear on my credit report for another 2 years.

Other than that, are there any rules/restrictions? Say, I win the lotter, get an inheritance or a bonus at my job the day after my discharge, is the money mine or are there rules/restrictions for a certain amount of time?

I'm asking about the money thing, because originally I thought that at the end, I could get like $10,000 out of the house to fix things that have failed or are failing in the past 5 years, like furnace, hot-water tank, washer/dryer, etc. We need money for dental work that we haven't been able to afford before. I can't get credit anytime soon, or the interest would be astronomical, so I thought the money I already have I could use.

The only thing it looks like I can get is a 401K loan. Why the additional restrictions? Looks like the 5 year Chapter 13 is really a 7 year Chapter 13, with no payments the last 2 years.

[Finallyover]

You can try to refinance, but it’s usually the lender requiring a two year wait after discharge. We refinanced after 4 months, however it was VA loan. We were able to cash out equity with the loan as well. From what I understand, yes, the ch 13 will stay on credit report two more years after discharge. But, I think it doesn’t impact your ability to get credit as much. We obtained credit immediately and purchased a new car within a few months as well. Good luck to you!

[justbroke]

For Chapter 13s, the "property of the estate" bankruptcy rule is on property obtained by a.) bequest, devise, or inheritance, b.) a property settlement agreement in a divorce, or c.) a life insurance policy as a beneficiary.

The lottery does not count in the special 180-day rule for inheritances / windfalls. The lottery is not enumerated in the bankruptcy code; only the 3 things I listed are in the bankruptcy code and they are not examples, but only 3 things that could be property of the estate after filing. As for the 3 things mentioned, a court "may" find that if you obtained property by those 3 means before case close, in a Chapter 13, that may subject the property to being used in the Chapter 13. But there are so few cases and even in the few the courts have done opposite things. I would not even worry about that scenario.

The Chapter 13 is not a 7 year Chapter 13. It's actually the creditors and credit bureaus. The credit bureaus are actually allowed to leave the derogatory notation of a Chapter 13 (just as they do for a Chapter 7) for up to 10 years. They can remove it at any time they choose. The reason that "some" creditors are shy about bankruptcy is that it is a major derogatory credit event which clearly shows that a debtor could not pay their bills. That's why it can be tough, but not difficult, to obtain certain credit products. The credit bureaus have voluntarily decided to remove a Chapter 13 after 7 years rather than 10 years.

Depending on your credit score, which is the most major factor in obtaining credit, you could obtain Care Credit (an expensive financing option) for medical costs (it's like 29% APR). I have a $7,000 card with them (they recently dropped me from $15,000 because I wasn't using it).

[shipo]

I'm awaiting my Chapter 13 discharge in a few weeks.... (it's been such a long 5 years!)

Anyways, what I'm wondering is if there are any other rules/restrictions after I receive the discharge.

I've noticed that:

• I can't refinance or purchase a house through normal means for another 2 years. (I know I could possibly get an FHA loan)
• I can't take money out of my house for 2 years - like through a Home Equity Loan.
• Bankruptcy will appear on my credit report for another 2 years.

Other than that, are there any rules/restrictions? Say, I win the lotter, get an inheritance or a bonus at my job the day after my discharge, is the money mine or are there rules/restrictions for a certain amount of time?

I'm asking about the money thing, because originally I thought that at the end, I could get like $10,000 out of the house to fix things that have failed or are failing in the past 5 years, like furnace, hot-water tank, washer/dryer, etc. We need money for dental work that we haven't been able to afford before. I can't get credit anytime soon, or the interest would be astronomical, so I thought the money I already have I could use.

The only thing it looks like I can get is a 401K loan. Why the additional restrictions? Looks like the 5 year Chapter 13 is really a 7 year Chapter 13, with no payments the last 2 years.

Hmmm, there are a few general guidelines, but none of the rules you've listed; your points one-by-each:

• I know several folks who've purchased/refinanced only a few months after the closure of a Chapter 13.
• There are no rules surrounding a HELOC, however, you may pay a higher interest rate.
• Yes, the Chapter 13 will stay on for two more years.
• For the most part (see justbroke's comments above), any monies headed your way are yours; period, full stop, the end.

A few other comments:

• I'm a few weeks in front of you (got my Chapter 13 discharge last week).
• The discharge is just the first step, then the account will be tagged as "Completed" (got that tag last week as well), and then tagged as "Closed" (typically 30 days, but there is one poster here still waiting for closure after something like a year). Until it is closed, my understanding is many credit issuers will not take a real look at extending you credit.

[sophieanne]

shipo - the note regarding the "Closed" tag is correct. In my case, although my case was discharged...the bank I had my mortgage would not take it out of BK status until they received notification that the case was closed.
FHA will allow you to purchase/refinance at the end of a Chapter 13. My understanding is some financial institutes (small number) can do the same if they do their own underwriting.

[bbeagle]

For Chapter 13s, the "property of the estate" bankruptcy rule is on property obtained by a.) bequest, devise, or inheritance, b.) a property settlement agreement in a divorce, or c.) a life insurance policy as a beneficiary.

The lottery does not count in the special 180-day rule for inheritances / windfalls.

Are you saying that there is a 180 day rule so that I inherit some money inside 180 days after the discharge/close, then I must give some of that up?

Do I have to wait 180 days to sell my house (hypothetically, if I so chose) as well?

[justbroke]

Are you saying that there is a 180 day rule so that I inherit some money inside 180 days after the discharge/close, then I must give some of that up?

I'm saying that in some districts, they determined that the 180-day thing doesn't matter in a Chapter 13 because another section of Chapter 13 modifies the "property of the estate" definition. That modification says that anything that comes into the estate after the case is filed... could be property of the estate. The disagreements are whether a confirmed plan, which vests "all" property back to the debtor, is bound by such expanded definition.

Do I have to wait 180 days to sell my house (hypothetically, if I so chose) as well?

No. And that's a solid no whether it's a Chapter 7 or a Chapter 13. However, the Trustee must have abandoned the property (explicitly) or the case closed. otherwise you need to seek approval to sell property.

The 180-day rule was a special rule to deal with inheritances and divorce. It was so that it was pretty clear on what is and is not considered property of the bankruptcy estate before, during, and after filing.