Although it is more challenging to get a personal loan after bankruptcy, it is not impossible. It is wise to plan for higher fees and interest rates. Here are some factors that will go into getting a personal loan after bankruptcy:
1. Type of Bankruptcy: Everyone who files for bankruptcy will have a chance to get a personal loan once their bankruptcy is all settled. For Chapter 7 bankruptcy, this process is much shorter than Chapter 13. So if you file for Chapter 7 bankruptcy, you will be able to secure a personal loan more quickly.
2. Current Income: If you can demonstrate that you have a steady form of income, a lender will be more likely to loan to you. Show proof of your income from an employer, displaying payment history over a prolonged period of time.
3. Credit Report and Credit Score: Your credit report will reflect the bankruptcy filing for 10 years. Some lenders may reject the loan based on the bankruptcy history alone. Other lenders will consider it and look at your credit history since the bankruptcy to see if you’ve shown positive changes. Getting a secure credit card and paying it in full each month, paying all bills on time, and keeping a steady income will all work in your favor.
4. Collateral: It is more likely to be offered a secure loan after bankruptcy. This means that you need to put up collateral that is equal in value to the loan amount. If you default on the loan, the car or asset you offered as collateral will be repossessed to pay off the loan.
Many lenders will enter a loan agreement with someone who has gone through bankruptcy if there is enough evidence of reliability. If you are looking to apply for a loan after bankruptcy, keep some things in mind. Have a steady income, a good record on your credit report of rebuilding credit, and some collateral to put up for a secure loan.
Contact a Bankruptcy Lawyer for Help
At Miles & Hatcher, LLP, we can help you through your bankruptcy decision. Whether you have filed for bankruptcy or are contemplating doing so, our expert team is here to answer any questions you may have. Call today, and you can set up a free consultation: (909) 481-4080.