Getting a personal credit after bankruptcy sounds a bit too optimistic, does it not? However, it is possible to get a bad credit personal loan, even after bankruptcy. It helps improve the debtor’s credit standing through efficient time management in repaying the loan. These loans are given for personal use, such as education, health care, cars, etc. These unsecured loans are granted mainly on the basis of the credit history of the concerned person and are paid back in installments.
Bankruptcy is a condition wherein the debtor is unable to return the money he/she owes back to his/her creditors. Generally, it happens that a debtor himself files for a voluntary bankruptcy. But in some cases, creditors have to take action against the debtor by filing a bankruptcy petition.
The United States Code (USC), which codifies the federal laws of USA, contains 50 titles. Out of these 50 titles, the 11th one has ‘Chapter 7’ and ‘Chapter 13’ dealing with bankruptcy. In Chapter 7, all the debts are cleared, however, some of the debtor’s property is liquidated, in order to salvage the creditor’s loss. Unlike Chapter 7, Chapter 13 laws do not confiscate the debtor’s property; it gives him/her an opportunity to repay the debts overtime, provided that he/she can afford to make them.
Availing Personal Credits Post Bankruptcy
It is possible to avail personal credits after bankruptcy. However, you need to approach the right lender, as not all money lenders provide loans after bankruptcy. Try to find lenders who specialize in providing bad credit loans. Higher interest rate is however a problem in case of these loans. Be careful and thoroughly explore the various options that are offered to you. Some of these may be traps to make the borrower fall in a bigger debt.
The person who wants loan after bankruptcy needs to fulfill the following criteria.
- Credit Score:
Some lenders offer loans after checking the debtor’s credit score. For the loan to get approved, a minimum credit score is required. It is possible to check it by ordering copies from credit reporting agencies like Equifax, Trans Union, or Experian.
Collateral is another thing that the lender may consider before offering a loan. It is the security provision facilitating the lender, in case the debtor is not able repay.
- Existing debt:
See that your debt is not too high, as it may affect your chances of availing a loan.
If you maintain a good credit history, your credit rating will go up. If the credit history remains positive for a considerable amount of time, getting a loan would be much easier.
Before you get a loan, assess you current position, i.e., your assets and your ability to repay. Lenders generally offer loans considering the debtor’s pre-tax income. Try to downsize the monthly mortgage that you need to repay. Bring it down from 28%, which is normally offered, to 20%. It helps to reduce the burden on your repaying capacity.
Bad Credit Personal Loans – A Ray of Hope
Earlier, debtors unable to repay their huge debts preferred to file for bankruptcy. This would wipe off the debts in their names. But, it also meant that they would face problems in availing loans for the next 10 years. In such a situation, the provision of bad credit loans comes to the rescue. These not only provide the debtor with money, but also revive his credit standings. They change the outlook of bankers towards the debtors in a positive way. Today, there are many lenders who offer bad credit loans. Unlike the olden days, bankruptcy is not uncommon anymore. It is relatively easier to find people having a problem with their credit standings nowadays. With a rise in the number of bankrupts, lenders operating in these areas of bad credit are also increasing. In fact, there is competition among lenders providing bad credit loans. No matter how much you earn, saving along with disciplined spending is crucial for a fine credit standing.