Filing for bankruptcy can be one of the most difficult and devasting experiences of your life. The financial impact stretches from damaging your credit to possibly losing some of your assets. The emotional consequences can feel even more intense than the financial burdens. Those who file for bankruptcy often feel a sense of hopelessness and failure, in addition to dealing with countless creditors and what feels like an endless legal process.
You may be surprised to hear that bankruptcy is not an uncommon experience. Over 740,000 individuals files for bankruptcy in 2017. Following the Great Recession, there were 1.6 million bankruptcy filings. Those recovering from bankruptcy, know that it harms your credit score making it difficult to be granted loans at reasonable interest rates. If you plan on filing for private bankruptcy loans, you should be familiar with the following information.
Can You Get Approved for a Loan Post-Bankruptcy?
This depends on the type of bankruptcy filed. Some lenders do not offer loans to those with bankruptcy on their records. However, while your credit score will dip after filing, you can improve it quickly with on-time payments until the amount is discharged. The faster you improve your credit score, the faster you can get a loan with reasonable rates while getting your financial life back on track.
Should You Apply for a Loan?
Before submitting the applications, request copies of your credit report from the major agencies: Experian, Equifax, and TransUnion. Next, consider applying for the loans with several lenders to compare offers.
What if You Get Approved?
Before signing the dotted line, always read the fine print. You are likely being offered terms that are less favorable so determine if you are getting a reasonable deal. Also, since you are paying interest on the borrowed money, only take what you need.
What if You Do not Get Approved?
If you are denied a loan, do not despair, there are many options:
- Appeal to the lender – Explain the factors that lead to the bankruptcy and how you have turned your financials around.
- Apply with a co-signer – A co-signer with a high income and strong credit history can help you qualify for the loan.
- Build your credit – Try to improve your credit score before reapplying.
Bankruptcy is an unpleasant process, and it will stick on your credit report for 7-10-years. That does not mean you will never get another loan. It just means you need to put in the elbow grease to build your credit back up to a reasonable rate. If you indefinitely need a loan, there are private bankruptcy loans to consider but just make sure to make the payments on-time!