How To Get A Loan After Bankruptcy

how to get a loan after bankruptcy

Bankruptcy can occur due to many reasons. Some of the reasons a person could become bankrupt may be divorce, accident, sickness, lack of personal finance skills, and economic downturns. A few of these reasons are avoidable, while others are not. Irrespective of your source of financial misfortune, you can get out of it if you apply the requisite financial knowledge—one major legal provision for getting out of debt is bankruptcy. Bankruptcy is a system of debt settlement that’s introduced by the government for helping a debtor come up with a more conducive debt settlement plan. 

Most people feel like a failure when they file for bankruptcy, and this is partly because they nurse the notion that bankruptcy blows your chances of getting a loan in the future. While we can’t deny that it will make the process a bit more difficult, you can still obtain a loan if you know how the process works. It is always helpful to understand more about filing for bankruptcy since it does change depending on where you live. For instance, if you are filing for Chapter 7 bankruptcy in Pennsylvania, it may look a little bit different than filing for Chapter 7 bankruptcy in Missouri. 

Is There A Reason For People To Be Worried About Getting A Loan After Bankruptcy? 

Debt can be unavoidable sometimes, and irrespective of the decisions we take to avoid taking a loan, It may just be the most reasonable thing to do at that moment. For example, you could be receiving unmarked envelopes from address such as PO Box 1280 Oaks PA or PO Box 1120 Charlotte NC. These are from debt collection agencies Convergent Outsourcing and Jefferson Capital Systems. Next, you could face a debt collection lawsuit, and decide to file bankruptcy. 

An average American needs a loan to buy a car, house, etc. therefore, chances that you’ll need a loan after getting a bankruptcy discharge are very high. Bankruptcy does not mean that your future loan applications will be denied. 

Let’s educate you more on this. After reading this article, you should be able to answer the following questions; 

● Can you get a loan while in Chapter 7 or Chapter 13 Bankruptcy 
● How to get a loan after Chapter 7 or Chapter 13 bankruptcy 
● The best loan for Discharged Bankrupts 

Is It Possible To Get A Loan While In Chapter 7 Or Chapter 13 Bankruptcy 

Is It Possible To Get A Loan While In Chapter 7 Bankruptcy? 

You may not be given a loan if you have an active Chapter 7 bankruptcy; this is due to what is called “Lender’s underwriting policies.” 

If you were granted a new loan while you have an active chapter 7 bankruptcy plan, the bankruptcy plan does not discharge the loan. It only discharges the loans acquired before filing for a chapter 7 bankruptcy. You still have to pay up your debt according to schedule, even after getting a discharge certificate. You should always consult an expert in bankruptcy before getting a loan while in a Chapter 7 bankruptcy. 

The great thing about Chapter 7 bankruptcy is that your bankruptcy case will be discharged before six months of filing the case, you can then apply for loans as before. 

Is It Possible To Get A Loan While In Chapter 13 bankruptcy? 

It is possible to get a loan while you have a chapter 13 bankruptcy. 

This provision had to be made because it can take up to five years to complete a chapter 13 bankruptcy. For example, a debtor would likely need to change his/her car within the process of filing a bankruptcy, and this means the buyer might need a car loan to get that done. It does depend where you are for filing for bankruptcy, for instance; Chapter 13 Bankruptcy Georgia or Chapter 13 Bankruptcy Texas 

It is possible to get a personal loan in Chapter 13 bankruptcy; the chances are greater than when in Chapter 7 bankruptcy. However, you need to have a cogent reason, and you must be able to prove that there are no alternatives before your loan request can be granted. 

Before a debtor can incur new debt while in a Chapter 13 bankruptcy, he/she must first seek the approval of a Chapter 13 bankruptcy court, the court will then look at the reason for the application, and if it will not affect your current payment before the loan request is granted. Before you request a loan, always seek the counsel of a Chapter 13 bankruptcy attorney. Many bankruptcy attorneys are searching out bankruptcy lawyer SEO tactics as bankruptcy filings are down across the United States. 

What Are The Best Loans For Discharged Bankrupts? 

Different types of loans have their modalities of considering loan requests from someone who recently got a bankruptcy loan discharge. For example, government-backed mortgages have rules that determine how long a discharged bankrupt should wait before he/she is given a loan. Depending on the type of mortgage you apply for, and the type of bankruptcy, the mortgage request can be granted in as little as two years after getting a bankruptcy discharge. You may even be granted non-conventional loans earlier than that. 

On the other hand, it is relatively easier to get a loan if you are applying for a consumer loan than a mortgage loan. In fact, most lenders offer consumers loans immediately they end their bankruptcy case. 

To say that a particular type of loan is the best for bankrupts will be to assume that all loan conditions are equal. Some loan options you may have after filing for bankruptcy include, but not limited to; 

Different Loans For Discharged Bankrupts 

● Secured Loans: You may be qualified for some low-interest loans if you have collateral. Just have it in mind that your creditor will take possession of the collateral if you default in the loan payment. 

● Payday Loans: These types of loans are characterized by high-interest rates, especially for individuals who just finished filing for bankruptcy. This type of loan is usually advertised as “loans for bankruptcy fillers” or “no credit check loans.” The high-interest rate for this type of loan is the major demerit. The advantage is that the loan request is quickly granted. 

● Credit Union Loans: You can get a consumer loan if you belong to a credit union. In fact, the process is much easier than for those that don’t belong to any credit union. 

● Secured Credit Cards: This is a type of credit card that allows you to build a credit score while still enjoying the benefit of owning a credit card. Before you’re issued this type of loan, you’re required to deposit a sum of money with your creditor as collateral. 

● Cosigned Loans: If you have someone that want to cosign a loan, it will help you get the loan at a much-reduced interest rate. This is only true provided the cosigner has a good credit score. However, if you default in your payment, then the cosigner will legally be held accountable. 

● Online Lenders: There are numerous online lenders who specialize in giving loans to individuals who filed a Chapter 13 or Chapter 7 bankruptcy. However, before you sign to undertake this loan, you should read through the terms and conditions of the loan. You may have to hire an attorney to help you interpret what is in the terms and conditions. You also need to watch out for hidden charges. 

What Does Getting A Loan After Chapter 13 Or Chapter 7 Bankruptcy Look Like? 

The common perception out there is that it is difficult to obtain a loan after filing for bankruptcy. Although it’s not easy, it is definitely not as difficult as people presume. While there are lots of rules that indicate that a recently bankrupt person cannot obtain a loan immediately, you can actually obtain some loans immediately after bankruptcy. Keep in mind that bankruptcy can change from state to state. So if you are planning to file for Chapter 7 bankruptcy in Nevada, you will need to be aware of that state’s-specific bankruptcy requirements and processes. 

However, before requesting a loan immediately after bankruptcy, you need to have it mind that you may not be eligible for any bankruptcy plan again. This law was put in place to prevent abuse of the process. Before you can file for a chapter 13 bankruptcy, it is mandatory that you wait for two years. As such, you will bear the burden of any debt you fall into.

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