I filed for bankruptcy. Now what? Will anyone extend me credit? Can I get a personal loan? These are all common questions asked after bankruptcy. Don’t give up on getting approved for a personal loan after bankruptcy. Post-bankruptcy loans are not impossible to obtain. In fact, most people are able to get rid of their debt and rebuild their credit faster than if they didn’t file.
If you live in the Milwaukee area and you’re searching for help getting a personal loan after bankruptcy, the Bankruptcy Law Center, LLP can help. Here’s what you need to know.
Life After Bankruptcy
Bankruptcy will eliminate most, if not all, of your debts. This should allow you to start saving the money that you once were paying to your creditors. Having money set aside will also help you obtain credit in the future. As you continue to be financially responsible, your credit score will continue to increase.
Your prior bankruptcy won’t automatically disqualify you for a loan. There are many lenders that will work with borrowers that are repairing their credit after bankruptcy. You can apply for credit and resume borrowing money again as you rebuild your credit. Many people are able to obtain car loans immediately after receiving their bankruptcy discharge.
How Long Bankruptcy Impacts Your Credit
How long bankruptcy affects your credit typically depends on what type of bankruptcy you filed. After filing for Chapter 7 or Chapter 13 bankruptcy, your credit score could drop initially, depending on the credit score you had before filing. Fortunately, the effect of bankruptcy on your credit report isn’t permanent. Responsible use of your finances following bankruptcy will allow you to obtain credit within a shorter period of time.
Here are the different types of bankruptcy and what to expect:
Chapter 13 Bankruptcy: The most important thing about Chapter 13 is that it will allow you to keep valuable property, such as your home and car, which might otherwise be lost if you were behind on your payments. Bankruptcy will stay on your credit report for seven years in the case of Chapter 13 bankruptcy. Once your bankruptcy no longer shows on your report, you may find it easier to apply for a personal loan.
Chapter 7 Bankruptcy: The basic idea of a Chapter 7 bankruptcy is to wipe out (discharge) your debts, such as credit cards, medical bills, and past-due utility bills. It is a highly effective way to improve your financial situation and obtain a fresh start. While a Chapter 7 bankruptcy stays on your credit report for 10 years, your credit score should start improving immediately after filing. While credit can be obtained immediately after a chapter 7 bankruptcy, most people find their credit score rebuilt in approximately 2 years.
Other Loan Options Available
Being debt-free will make any person more desirable to a prospective creditor. But oftentimes creditors are far more interested in your current situation than what may have happened in the past. Once the high-interest debt has been discharged, most people are easily able to pay their monthly expenses and even start saving money. Responsible financial practices will result in a good credit score before long.
Bankruptcy is a great solution to alleviate debt and get a fresh start. If right after filing you can’t find a lender willing to approve your application for an unsecured personal loan, there are other options that you can consider.
- Add a cosigner – In some cases, adding a cosigner with better credit can improve your chances of getting approved for an unsecured personal loan. It will be important that you check with a potential lender first, however, as not all lenders allow for cosigners.
- Look into secured loan options – Secured loans that require a savings account or auto equity as collateral is another option. One thing to take note of is that the lender may seize the collateral if you fail to repay your loan. Therefore, it will be crucial that you make every payment on time if you choose this method.
Have More Questions About Personal Loans After Bankruptcy?
The Bankruptcy Law Center, LLP is a local law firm specializing in Chapter 7 and Chapter 13 consumer bankruptcies. We can help you navigate life after bankruptcy to help you get a fresh start. We have offices located throughout Southeastern Wisconsin ready to provide a simple and effective solution to your financial problems.
Contact Bankruptcy Law Center to learn more about personal loans after bankruptcy.