If you’re thinking about filing for bankruptcy or you are just coming out of a recent filing, your financial future could seem uncertain. Bankruptcy isn’t always the ideal solution for solving money-related issues. Bankruptcies don’t forgive certain types of debt. However, it does offer people a way to restructure their finances without being hassled by bill collectors and debtors while they figure things out.
While you might think that last person lenders would want to loan to would be someone who recently filed or had a bankruptcy discharged, it is quite the opposite.
Depending on the type of bankruptcy filed, consumers come out of proceedings with reduced or no debt. In many cases, it’s extremely easy to get a loan after bankruptcy due to no longer being overextended with other creditors. For instance, in Chapter 13 filings, debts (other than student loans, child support, legal fees, etc. ) get zeroed out. However, hard assets like your home or automobiles could require liquidation to satisfy court orders.
Without a house or a car, people need to continue with their lives. And they need to rebuild their credit from the ground up. These days, no shortage of lenders are willing to work with people who have less than perfect credit.
What Qualifications Are Needed To Get A Loan After Bankruptcy?
Every lender has its own lending criteria, so the requirements for securing a loan vary from vendor to vendor. One thing to keep in mind when evaluating loans and lending options is that these financial services are likely to carry higher interest rates or expensive annual fees.
Types Of Loans Available To People After Bankruptcy
Auto Loans – Everyone needs dependable transportation, regardless of their financial situation. Today, people can find many auto lenders who specialize in financing cars for people fresh out of bankruptcy. Like all auto loans, you may need to meet a minimum down payment or have a verifiable source of income to qualify. The vehicle is collateral, so in the event of missed payments, the lender can rightfully repossess the automobile and recover losses. (We recommend you avoid making payment mistakes after setting your financial ship straight!)
Secured Credit Cards – Paid credit card records to offer a pathway back to a higher credit score post-bankruptcy. When rebuilding credit after a bankruptcy, it could be challenging to meet eligibility requirements for an unsecured card. Typically, unsecured credit card providers require a security deposit that is equal to the amount of the credit line on the secured card. Using the card intelligently and making timely payments for an extended time helps build a solid credit history over time.
Bad Credit Loans – Bad credit loans are another option for people restoring their financial future after going through a bankruptcy filing due to divorce, lost employment, medical bills, credit card debt, or other overextensions of their credit. Like secured credit cards and post-bankruptcy auto loans, this financial service helps people to cover unexpected expenses, even with less than perfect credit.
You may also like to know about 6 Mistakes You Must Avoid While Taking a Personal Loan
Deciding What Is Right For You
source: towardsdatascience.com
Bankruptcy filings remain public records for seven to ten years. As time passes, the impact of a bankruptcy lessens, primarily if you work diligently to restore your credit rating to pristine status. Life always happens, so a temporary bump in the financial road isn’t uncommon. There is still a comeback road available to anyone who wants it. Before signing any new contracts, read every line of the fine print to make sure the decision you’re making is the right for you and your family.
