Bankruptcy is the worst thing that can happen to your finances. However, it’s not the end of the world for your credit history and personal loan experience. Even if you’ve made a couple of mistakes that led to bankruptcy doesn’t mean you wouldn’t be able to take a personal loan after bankruptcy in the future.
With the right approach, it’s easy to set things up and get back to the position where taking personal loans doesn’t differ from a borrower with no bankruptcy. If you’ve declared bankruptcy, it’s time to put in some effort and prepare for your loan application process. You will no longer worry about this issue with the main questions answered.
Is It Possible To Get a Personal Loan After Declaring Bankruptcy?
The general answer is positive. If you’ve experienced bankruptcy, you can still request personal loans and get approval. However, the overall process can be more daunting, take more time, and presume stricter loan terms for the borrowers.
Bankruptcy isn’t there for eternity in your credit history. After a couple of years, you should no longer be bothered about personal loan lenders paying main attention to your bankruptcy. But if you try to get personal loans shortly after going bankrupt, it’s advisable to follow some useful tips.
How to rebuild your credit and make sure your credit report and credit score are enough to get a loan agreement for unsecured personal loans? This article will answer your main questions and let you go into the payday alternative loan application process smoothly.
How Does Bankruptcy Impact Your Ability to Get a Personal Loan?
Going bankrupt will affect your ability to get secured loans. However, each case is individual and depends on various factors. What types of bankruptcy did you experience? What type of secured personal loan would you like to take?
Your income and credit report are also important factors affecting how you will handle the debt bankruptcy issue when taking personal loans. Let’s take a look at these factors and find a solution.
If a debt buyer has frozen your bank account and you don’t have enough cash deposit to make monthly payments, there’s the answer. Bankruptcy relief may be the best option to protect your savings account. You will consolidate all your payments into a manageable monthly payment plan.
Type of Bankruptcy
The first and most critical question will relate to the type of bankruptcy you’ve had. There are various types of debt bankruptcies, so let’s take a closer look at some of the most popular ones:
- Chapter 7 bankruptcy. If you filed for this type of Chapter 7 bankruptcy, it could have hurt your credit badly, and your unsecured debts could be discharged. And the signs of Chapter 7 bankruptcy could remain on your secured credit card: for up to several years.
- Chapter 13 bankruptcy. Opposite to Chapter 7 bankruptcy, with this type of bankruptcy, you can get a repayment period to repay your unsecured debts. This payment plan can take up from 1 to 3 years and will also be featured in your credit reports for around 7 years.
What is the most favorable type of debt bankruptcy for multiple lenders? With Chapter 13, you can expect better conditions from the personal loan after bankruptcy providers than with Chapter 7 bankruptcy.
Type of Personal Loan
Now let’s discuss what type of personal loans you would like to get. It’s advisable for people experiencing bankruptcy to apply for secured personal loans bankruptcy. This decision can be favorable in many ways.
With the collateral being an integral part of the secured loan, you give the lender some safety. And it’s the main reason why going for secured personal loans can be somewhat helpful.
On the other hand, you can find it hard to obtain unsecured loans since there’s no collateral on the borrower’s side. What does it mean? You will find it more complicated to get credit card payday loans. Getting approved for a home equity line of credit can also be daunting.
Income
What are the chances of getting a payday loan if your income is stable and shows progress? In this case, there are huge chances for you to be approved for the home’s equity loan. If you continue getting steady income even after bankruptcy filing, it means you can repay your unsecured debt fast.
In addition, it shows you as a person that can possibly manage a new loan. On the other hand, if your income isn’t enough or it’s not stable, you can have a hard time requesting a personal loan after bankruptcy. So, it’s great advice to work on your income first to have a higher chance of obtaining an unsecured loan.
Credit History
It’s clear that a better credit score can make all the difference. Mistakes happen, and going bankrupt can be caused by a silly mistake in rare cases. In most cases, however, you will not be in the most favorable position for loans. If you struggle with the debt history, there’s no need to go into complete disbelief for loans.
Many lenders are focused on helping people with loans after bankruptcy so they won’t be left alone. If you’re struggling with a financial situation due to medical bills, you can still get assistance from government agencies. If you also can’t become debt free despite on time payments, help also applies. But as a bankruptcy filer, a credit check could be necessary.
Can I Rebuild My Credit After Bankruptcy?
Bankruptcy usually highly damages your credit score, but there are ways to rebuild your debt and leave no sign of reorganization bankruptcy behind. If you don’t want your past mistakes to affect your future financial choices, here are some steps to rebuild your credit.
- You need to have all your debt discharged. By checking the reports, you can make sure that your unsecured debt is covered and no longer can bother you.
- Work on your budget. If you don’t have a stable source of income yet, it’s time to build it for the loans. With a stable budget, you can continue repaying your secured debt and expect a positive result from the car loan providers.
- Start small by applying for a secured credit. It will work if you can find suitable collateral for this type of loan and repay it on time.
- Don’t apply for too many loans at once, and always keep up with the payments.
These may look like simple tips, but a free consultation is helpful. If you don’t know where to start with loans after going bankrupt, it’s your chance to start anew.
Read More: How to Rebuild Credit After Bankruptcy
How to Find Personal Loans For People in Bankruptcy
Bankruptcy is hard to deal with in many cases. And looking for a personal loan is one of the most common issues borrowers face. So how to find a home equity loan that can have favorable conditions for the borrowers? Here are some of the tips:
- First of all, prefer secured title loans over unsecured loans. With a secured personal loan after bankruptcy, you will need collateral to secure your funds. It won’t work the same for unsecured personal loans. This is why most lenders would take their vote for secured personal loans.
- You can find a collection agency that specifies such cases. You must have examples of a personal finance writer locally. Or you can find them online. Such lenders take care of the borrowers with liquidation bankruptcy and help them overcome the difficulties.
- Be patient. Bankruptcy is a major financial burden that will stay with you for years. So, you have to be patient with the application process for loans and rejections.
You will surely find a way to apply for a personal loan after bankruptcy, but it may take time. If you keep patience and take your steps gradually, you will get the desired result.
How to Get a Personal Loan After Bankruptcy
To get personal loans after bankruptcy, you need to find the best working approach for your case. First of all, figure out what type of debt bankruptcy you’ve experienced. With that in mind, start looking for the pending service and checking the requirements. You can start discovering personal loans even if you’re still unable to repay the debt.
The more time you get to prepare for the loan application, the smoother result you’ll get. Credit unions may offer no credit check loans to individuals who file bankruptcy and receive a bankruptcy discharge. This is because they understand the importance of credit scores. But they may also suggest that starting with a secured credit card requires a deposit.
Sources Used in Research for the Article:
- Chapter 13 – Bankruptcy Basics, Administrative Office of the U.S. Courts,
https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics - Chapter 7 – Bankruptcy Basics, Administrative Office of the U.S. Courts,
https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics - How to rebuild your credit, Consumer Financial Protection Bureau, https://files.consumerfinance.gov/f/documents/201702_cfpb_rebuild_credit_english_OaH.pdf