Unformatted text preview: ccumulate and manage money. In considering those who have had a bankruptcy, lenders want to know the type of bankruptcy. Was it a liquidation (Chapter 7) bankruptcy or a Chapter 13 bankruptcy? Under a Chapter 13, also called the wage– earner's bankruptcy, the individual pays off all creditors in full under a schedule approved by the bankruptcy court. The debtor makes payments to a court–appointed trustee, who, in turn, makes the payments to the creditors over a two– to three–year period. It is obvious that lenders look at someone who opted for a Chapter 13 bankruptcy with more leniency. Lenders want a complete explanation as to why the bankruptcy took place. Was it due to circumstances beyond the borrower's control. Or was it due to poor financial management? The answer makes a big difference in the lender's decision. Lenders also insist that time has elapsed since the discharge of the bankruptcy. Most lenders require a two– to three– year waiting period. Under a Chapter 13 bankruptcy, lenders consider the borrower after all creditors have been paid. In some cases, they may even consider the loan if the borrower has completed most of the payments. Another requirement is that borrowers have established good credit since the bankruptcy. Lenders want evidence that the buyer is paying existing debts on a timely basis. Under a Chapter 13 bankruptcy, payments to the trustee would serve as a credit reference. MORE ON DESIRE TO PAY “OTHER MOTIVATIONS AND EMOTION NEEDS”
When examining a borrower's desire to pay, we must also consider the borrower's motivation and their emotion needs on the loans. Sometimes a strong desire on the part of the borrower to make the payments is one of the most important reasons for
13-16 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 13: QUALIFYING THE BORROWER
approving a loan. Among the things a lender considers when trying to determine motivation are the following: Desire for homeownership –During the initial qualific...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10