Need advice please! Converting to a 7 from a 13. Good idea or bad?

[STEPH1079]

We are currently in a Ch.13 with one year left. Our lawyer told us that we could convert to a Ch.7 since we have paid back the percentage owed that was given in our plan.
I wasn't even aware that a person could do this, but he said they did 4 or 5 last night. If you fall within the guidelines, evidentally it is possible.
We are hesitant for a few reasons though. We have an ARM currently and our interest rate is pretty high (11%) that can fluctuate every 6 months. Originally, we were going to re-finance once we were discharged from the 13.
If we convert to a 7 and then re-finance this coming fall, would our interest rate be worse b/c we will have a 7 listed on our credit report? I guess I'm wondering if we should just tough it out one more year and finish the 13 instead of converting.
I would like to convert though b/c of course we wouldn't have to pay anything back anymore, and we would be able to re-finance a lot sooner.

I would appreciate any insight on this. Thanks!

[dweebolina]

We filed Ch. 7 Dec. 2005 and just recently tried to refinance our home equity for that same reason but were denied. This is with the same bank and all payments have been on time and our loan with them reaffirmed.

[MTG_BANKER_OH]

We filed Ch. 7 Dec. 2005 and just recently tried to refinance our home equity for that same reason but were denied. This is with the same bank and all payments have been on time and our loan with them reaffirmed.

Most second mortgage lendners are going to want at least 4 years out of BK.

[MTG_BANKER_OH]

We are currently in a Ch.13 with one year left. Our lawyer told us that we could convert to a Ch.7 since we have paid back the percentage owed that was given in our plan.
I wasn't even aware that a person could do this, but he said they did 4 or 5 last night. If you fall within the guidelines, evidentally it is possible.
We are hesitant for a few reasons though. We have an ARM currently and our interest rate is pretty high (11%) that can fluctuate every 6 months. Originally, we were going to re-finance once we were discharged from the 13.
If we convert to a 7 and then re-finance this coming fall, would our interest rate be worse b/c we will have a 7 listed on our credit report? I guess I'm wondering if we should just tough it out one more year and finish the 13 instead of converting.
I would like to convert though b/c of course we wouldn't have to pay anything back anymore, and we would be able to re-finance a lot sooner.

I would appreciate any insight on this. Thanks!

He had contacted me on a PM reguarding this situation and I figured I would comment here in the open forum. In this situation especially with only 1 year left on the CH 13 to stick it out and then this will be over. It will look worse if he converts to a chapter 7 now and severely impact the ability to refinance the loan in a year. Lenders look more kindly for a chapter 13 rather then a chapter 7, and many count the clock on the BK from the befinning rather then the end. In his current situation he can possibly refinance his loan now while in a chpater 13 with an FHA loan. He does not have to pay it off just get his loan into a fixed rate, that way he can come out of the Chapter 13 with a good rate and not have to refinance later. That depends on some other factors though as far as DTI and qualifying for the loan. The market for loans just after a chapter 7 is very tough to get approved currently and i only know of one lender that will do them at 100% with a 620 score less then 1 year out. The days of the 580 100% loan with aBK less then 2 years are nonexistant currently.

[chucko]

Most second mortgage lendners are going to want at least 4 years out of BK.

Wait a second...I was discharged in Feb of 06 and bought a house this past August. I have a prepayment penalty for 2 years, so I'm looking to refinance in August of next year. Am I completely screwed? What about FHA?

[MTG_BANKER_OH]

Wait a second...I was discharged in Feb of 06 and bought a house this past August. I have a prepayment penalty for 2 years, so I'm looking to refinance in August of next year. Am I completely screwed? What about FHA?

I am talking about a standalone second mortgage without doing a first. You should be ok to refiance. It will be tough to do a conforming 80/20 loan. You can do FHA( depending on price limits in your area) and you can do a my community loan(depending on income limits in your area). You can also do a confomring loan but you will have to do it as one loan and not split it up into two. If you keep everything clean after the BK yo ucan definitley do something that will get you a good rate.