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Buying a Home While in a Chapter 13 Bankruptcy & made it look easy!!

Real Estate Agent with eXp Realty 201006041

OK... I am a long time lender by trade "in my old life" and still know "my fair share" on the lending side, but Gregg Anderson of imortgage in Medford, Oregon showed me a new one.

I will fully admit to being unaware of a buyer's ability to purchase a home while in a Chapter 13 Bankruptcy. Equally important in this story is the ease with which it was done. (or it looked that way to us outsiders as Gregg has a knack for making them all seem that way.)

I was very sceptical when the offer came across on my new listing and in the details they noted that they "just needed to get approval through their bankruptcy"...

ummmm....neeed to do what??? This sounds like it is going to be a nightmare!! ...

But it was Smoooothl!!! In fact, if they hadn't disclosed what they were having to do I never would have known.

All I have to say is that there are a lot more options out there than many of us may know. There are also a lot more people that are still waiting on the sidelines to buy when if they pair up with a knowledagble lender like Gregg they can get things done that they never imagined.


Best of luck in 2013 and Thanks again to Gregg Anderson!!!



Joe Yates

The Atlas Group

Medford, Oregon





Foreclosure / REO, Short Sales, Investment Property


Comments (21)

Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

I've sold a couple of buyer who were in chapter 13.  Once they have made timely payments to their plan, the trustee can approve the purchase. After all, they have to live somewhere and paying a house payment is little different than paying rent. 

In fact, the lender used their successful and timely chapter payments as a positive credit reference.


Good for you.

Jan 19, 2013 07:22 AM
Joe Yates
eXp Realty - Medford, OR

Thanks Lenn... Funny thing is that they say if the chapter 13 had been paid off completely then it would be subject to lending "seasoning rules" and they usually have to wait 1 or 2 years from discharge.

Jan 19, 2013 07:35 AM
Dwight Puntigan
DRP Realty, LLC - Saint Peters, MO
Dwight Puntigan

Thanks, I will check and see how this works in the St Louis area.

Jan 19, 2013 08:45 AM
Art Welch
Superstars Realty - Buckeye, AZ

Hate to be a downer on this one but if they are in 13 they shouldn't be allowed to purchase until they have gone through Dave Ramsey's steps to financial freedom and passed.  Those that are in 13 do not know how to handle their finances and should not be going further in debt until they learn to mange it.

Jan 19, 2013 09:50 AM
Kimberly Thurm
Berkshire Hathaway HomeServices Chicago - Naperville, IL
Broker / Relocation Consultant ABR, CRS, GRI, SFR

Hummm, I didn't know this.  What type of financing?  Did they have a large down-payment?  What about their credit - was that an issue?  Thanks for sharing...

Jan 19, 2013 10:20 AM
Jeanne Kozak
RE/MAX In Action - Martinsburg, WV
REALTOR and Broker/Owner in WV and VA

It is sometimes very confusing to understand how these things can work, and yet we often have buyers that cannot qualify with very minor issues with their credit...jusy sayin'

Jan 19, 2013 12:12 PM
John Juarez
The Medford Real Estate Team - Fremont, CA



Maybe an old dog CAN learn new tricks! Good information to salt away for the future.

Jan 19, 2013 12:33 PM
Joe yates

Hey Art... I can't say that I totally disagree with you. 

Jan 19, 2013 02:26 PM
Joe yates

Hi Kimberly....it was a regular fha deal. Nothing special at all. :)

Jan 19, 2013 02:31 PM
Joe Yates

I totally agree Jeanne.... I can't say it makes sense....but it's a good option anyway.;)

Jan 19, 2013 02:35 PM
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thanks for the information. I will share it with other clients who might be in similar situation.

Jan 19, 2013 07:13 PM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland


Who is the "they" in your comment #2 "they say???

In a past life, I did a huge amount of business with a bankruptcy law firm in MD.  There was and is nothing in the bankruptcy code that precludes the purchase of real property while in a chapter 13 plan for "reorganization for wage earners".  If the chapter 13 trustee sees a record of timely payments to the debtor's chapter 13 plan, they can approve the purchase of a home.   Of course, in a 5 year chapter 13 plan, the trustee would want to see 2-3 years of timely plan payments and other evidence of feasibility. 

Whether or not to approve a mortgage loan for individuals in a chapter 13 plan depends on an individual lender's company policy or overlays.  Just as some lenders will approve an FHA-VA mortgage loan for borrowers with a 620 credit score, other lenders will require a 640 minimumm credit score. 

Problem is, when we hear a loan officer say, "They need a 640 credit score", we may believe that is universal to the detriment of a buyer/client.  Best to research other lenders to determine whether or not it is an FHA/Fannie/VA guideline or merely a specific lender overlay. 

In one case, despite the "published requirements for mortgage loans following chapter 7 bankruptcy", I have had several VA borrowers approved within a month of receiving their discharge in bankruptcy.  This despite the many tables we see published that require a 2-4 years waiting period. 

It doesn't hurt to inquire of several lenders just what is their individual company policy regarding loan approval.  They differ widely.

Folks "say" a lot of things because it's what they believe.  Sadly, they may simply be repeating what they think and it may have no basis in fact.

Jan 19, 2013 07:32 PM
Steve Warrene
Your Town Realty - Lower Burrell, PA
Pittsburgh Realtor North and East Pgh.

I love all the knowledge my lender has.  Any time we run into an issue we don't full know all their options on the money side, we give thier number to our lender and have her call the client and go from there.

Jan 19, 2013 10:50 PM
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Most excellent post to ponder and this business as well as life never disappoints...thank you for sharing this

Jan 19, 2013 11:33 PM
Joe Yates

Great additional comment  Lenn!

I was retail lender before I became a long time wholesale mortgage lender. You are so right that guidelines vary substantially do to specific lender guidelines or overlays. Some lenders even have portfolio products that give them the ability overlook (or disregard) certain things if there are good compensating factors.  I appreciate your valuable input to this post. 

Thank you,



Jan 20, 2013 01:56 AM
James Locklear
Online Marketing Advertising Consultant - Seattle, WA
Social Media Training , Virtual Services, Search Engine Optimization Lattitude - SEOL


Absolutely remarkable.  Will wonders never cease!  Hope not!

Jan 21, 2013 02:27 AM
Marc McMaster
RE/MAX Centre Realty - State College, PA
Putting my clients before myself

News to me too, thanks for the heads up.  Always good to learn something new about the business everyday. 

Jan 21, 2013 11:17 AM
Brian Park
Park Realty Investments - Murray, UT

OK, now you let the cat out of the bag. That was one of my prospecting sources back when. I worked for a major Corporation for years and noticed some of the commercial companies had no trouble buying and selling in bankruptcy and wondered if the individual could do the same. So when I became an agent I found out and worked bankruptcy's and had it to myself basically for years in my marketplace because the ordinary agent thought they were untouchable and I wasn't telling anyone any different.

Jan 24, 2013 05:41 AM
Joe Yates
eXp Realty - Medford, OR

Well you were ahead of the majority of us Brian that's for sure. Nice Job!!

I have a feeling their still aren't that many hitting up the attorneys too hard.

Good luck my friend!

Jan 24, 2013 11:20 AM
Mary Hillerman
Crye-Leike Realtors® - Bentonville, AR

Hi Joe, Thanks for the post, great information.

Apr 07, 2013 11:13 PM