Making the important decision of filing for bankruptcy isn’t as daunting a decision as one may think. If you would like to get a loan, or any other credit, the most important thing to do is to re-establish your credit worthiness. Many may wonder if getting a loan is even possible. Below, you will find all of the information you need about what happens after making this pivotal decision.
Is It Possible to Obtain a Loan After Filing for Bankruptcy?
To make a long answer short: yes, it is possible.
The process of bankruptcy entails that you will liberate yourself from your past debts, and that you will be starting over from zero. Although a bankruptcy does affect your credit score, the credit score isn’t necessarily what you should be focusing on, because, as is the case for most bankruptcies, going through this process is precisely what will help you build up your score again. However, it will be of utmost importance that you make serious efforts to build trust between yourself and lenders.
It is important to note that although you have the right to obtain credit after declaring bankruptcy, you are required to disclose your bankruptcy when you apply for credit. In addition, we strongly suggest that you make very careful use of this credit to avoid finding yourself in insolvency again.
Where to Start?
Secured Credit Card
Although you will have to give up your credit cards when filing your bankruptcy, that doesn’t mean that you will no longer be able to procure one. Once you’ve been discharged of all of your debts, the best way to start building up your credit would be through a secured credit card. With a secured credit card, you will have to provide a security deposit (usually 500$) equal to the amount of the credit card limit. After one year of using it, you can either close the account with your deposit being refunded to you or get your deposit back with the possibility of increasing the limit of your card. If you make sure to meet all of your payments, then you can rest assured that you will be on the right track towards building up your credit.
Private Loans
After a bankruptcy discharge, there is no waiting time for acquiring other types of loans. You can most definitely apply for private lender loans such as personal loans or car loans. However, with these types of loans, lenders will likely ask for your current financial information and financial history. Because of this, it would be wise to attempt to rebuild your credit before applying for these types of loans. That way, your application is more likely to be accepted.
That being said, you should remain vigilant when it comes to applying for personal loans. If it sounds like it’s too good to be true, then it probably is. Make sure you read the fine print before making a decision.
You may also like to read: The Best Tools to Restore Your Credit Report
Getting a Mortgage After Bankruptcy
It is certainly possible for you to acquire a house after a bankruptcy. Filing for bankruptcy doesn’t mean that you have to give up on your dream of owning a house. One option you can consider is to reach an agreement with the seller in which you could rent the house with the option of purchasing later on. This would allow you to find a lender while rebuilding your credit during the renting period. You can also choose to be patient and wait until the bankruptcy disappears from your file. This would allow you to save up money during this time.
But that doesn’t mean you can’t actually get a mortgage. However, the more time that has passed since your bankruptcy, and the better your current credit rating, the more likely that you will be approved for a mortgage. Your possibility of being approved also depends on the type of mortgage you are applying for.
