VA Streamlines and Bankruptcies

Does a BK have any effect on a VA streamline refinance? This is a question that gets asked by Veterans almost every day and from all walks of life. The simple answer is Yes, Yes it does! The requirements or guidelines are much different than if you were trying to purchase a home. I might add that everyone’s situation is different and really it also depends on if the Bankruptcy was a chapter 7 or  chapter 13.

The difference between a BK 7 and a BK 13 is this – A Chapter 7 will involve a complete liquidation of debts listed in the bankruptcy whereas a Chapter 13 will  involve debt restructuring by paying a trustee every month who in turns pays the debts listed on the bankruptcy.

Here is what the VA says on a streamline refinance bankruptcy – “Although no underwriting is required, approval of new credit may be required by the trustee in a chapter 13 BK” This is always the case. If a Veteran is paying on a chapter 13 BK they must get special permission from the courts and trustee to refinance their VA loan. Things are different for a Chapter 7. Most lenders will do a streamline refinance just as long as the Chapter 7 bankruptcy is discharged.

Remember though that the rules of late payments and minimum credit scores are still applicable. A Veteran cannot have any 30-day late payments on the mortgage within the last 12 months and must have a credit score of at least 620. If a Chapter 7 has just been discharged chances are the credit score is not going to be 620 and thus making them ineligible for the streamline refinance. Please understand that the credit score requirement IS NOT VA! This is an overlay for both credit bureaus and the VA itself.

If this information has been helpful or you have any additional questions please contact us at LowVARates at 866-569-8272, We’d be more than happy to answer your other questions and help you into the Refinance that will be easiest for you and best for your situation. Refinancing can be overwhelming especially when you have to deal with a BK 7 or a BK 13, but we will talk with you personally and help you find what’s best for you!

2 thoughts on “VA Streamlines and Bankruptcies

  1. I own a home now and have never missed a payment. I was involved in a Real Estate Corporation and I had to file BK which was discharged in October 2012. Through this whole ordeal I never missed a mortgage payment or any obligation regarding my home. Can you do a VA streamline refinance? I am A Vietnam Veteran and gross income of 60,000+. I have owned this home for over 15 years. it has a conventional loan now.

  2. George,

    What is your credit score? That is the big indicator. Give us a call and we can let you know if you qualify 866.569.8272

Leave a Reply

Your email address will not be published. Required fields are marked *

© 2021 Low VA Rates, LLC™. All Rights Reserved. Low VA Rates, LLC ™ is not affiliated with any U.S. Government Agency nor do we represent any of them. Corporate Address: 384 South 400 West Suite 100, Lindon, UT 84042, 801-341-7000. VA ID 979752000 FHA ID 00206 Alaska Mortgage Broker/Lender License No. AK-1109426; Arizona Mortgage Banker License #0926340; California DBO Finance Lenders Law License #603L038; Licensed by the Delaware State Banking Commission License #018115; Georgia Residential Mortgage Licensee License #40217; Illinois Residential Mortgage License #MB.6761021; Licensed by the New Jersey Department of Banking and Insurance, Ohio Mortgage Loan Act Certificate of Registration #SM.501937.000; Oregon Mortgage Lending License # ML-5266; Rhode Island Licensed Mortgage Lender License #20143026LL; Texas License LOCATED at 201 S Lakeline Blvd., Ste 901, Cedar Park, TX 78613; EAH061020 NMLS ID# 1109426 Consumer NMLS Access Click on these links to access our Privacy Policy and our Licensing Information. Consumer's total finance charges may be higher over the life of the loan. Consumer NMLS Access - NMLS #1109426.

*Annual savings calculator based on 2015 monthly average savings extrapolated year-to-date.