Filing for bankruptcy may help you press the reset button on your financial life, but the bankruptcy process itself can sometimes be a bit confusing. A common concern of many filers for bankruptcy is whether they will be able to receive a loan while in bankruptcy.
While in bankruptcy, you will have a more difficult time obtaining a loan than a typical borrower. The process of filing for bankruptcy, however, shows that you have taken steps towards taking control of your financial life. As a result, you may be able to obtain a loan shortly after completing the bankruptcy process.
Since your ability to get a loan during bankruptcy depends on your unique financial circumstances, it may be helpful to consult a bankruptcy attorney. For a free, no-obligation consultation, simply fill out the form below.
While getting a loan while in bankruptcy is not the most highly recommended financial step, there are a few types of loans that you may be able to secure while in bankruptcy. These include car loans and some personal loans.
However, car loans may be easier to obtain for people in Chapter 7 bankruptcy rather than Chapter 13. The reason for this discrepancy is that Chapter 13 bankruptcy filers usually must get permission from their bankruptcy trustee before taking out a loan.
Of course, just because you may be eligible to obtain a loan while in bankruptcy does not mean that you should jump at the chance and do it. The dangers of taking out a loan during bankruptcy include:
Instead of seeking loans during bankruptcy, a more sound financial strategy may be to wait until your bankruptcy proceeding is over before taking out any loans, and then taking out only small loans that are easy to repay, in order to rebuild your credit. A bankruptcy attorney can give you advice about steps you can take.
In addition to obtaining a loan while in bankruptcy, you may also be concerned about your ability to obtain a loan after the bankruptcy process has ended.
To be fair, the ability to take out a loan immediately after bankruptcy depends on your individual circumstances. However, rebuilding your credit after bankruptcy is very important.
In order to obtain loans after bankruptcy, you will have to make a concerted effort to improve your credit score. Here are a few ways people may improve their credit:
By taking out wise loans and repaying them on time, you may likely improve your credit score. In turn, by improving your credit score, you might qualify for better interest rates on future loans.
To learn more about taking out loans while after filing bankruptcy, or improving your credit score after bankruptcy, connect with a local lawyer today.