Getting a Loan After Bankruptcy

Getting a Loan After Bankruptcy
Information in this article does not constitute legal advice, it is for informational purposes only, and may not constitute the most up-to-date information. Readers should contact their attorney for advice on any particular legal matter.

So, you've successfully completed your bankruptcy and are now wondering if you can get a loan. The good news is that you do have options, depending on where you are in the post-bankruptcy process. While a payday loan might be tempting, it's important to note that these loans come with high-interest rates. Instead, you may want to consider other options that offer much lower interest rates.

Now, let's dive into the details.

Getting a Loan After Bankruptcy

If you're facing a financial crisis due to job loss, injury, divorce, or other reasons, filing for bankruptcy relief can be a helpful option. It's not the end of the world, and many people seek help from the bankruptcy system to recover from such situations. Bankruptcy allows you to start anew and get back on your feet. In fact, getting a loan after bankruptcy can be a part of that fresh start. So, don't be discouraged by the idea of bankruptcy, as it can be a beneficial tool for overcoming financial challenges.

Why Are People Worried About Getting a Loan After Bankruptcy?

It's easy to assume that someone who has filed for Chapter 7 or 13 bankruptcy would never want to go into debt again. However, loans are a reality for many people, especially when it comes to buying a house or a car. If you've filed for bankruptcy, you might be worried about your ability to get a loan in the future.

The good news is that bankruptcy doesn't necessarily prevent you from qualifying for loans down the line. In this article, we'll cover:

  • Whether you can get a loan while in Chapter 7 or Chapter 13
  • How to get a loan after filing for Chapter 7 or Chapter 13
  • The best loans for those who have been discharged from bankruptcy

Can You Get a Loan While In Chapter 7 or Chapter 13 Bankruptcy?

Can you get a loan while in Chapter 7 Bankruptcy? 

Getting a loan while in Chapter 7 bankruptcy can be challenging due to the underwriting policies of most lenders. Although you might be eligible for a payday or other loan, it is important to note that your current Chapter 7 bankruptcy does not discharge the new loan. This means that you will still be required to pay back the debt even after receiving your bankruptcy discharge. Therefore, it is advisable to consult your bankruptcy lawyer before taking any steps.

The good news is that most Chapter 7 bankruptcy cases are usually discharged and closed within four to six months. Once your Chapter 7 case is closed, you can apply for loans as needed.

Can you get a loan while in Chapter 13 Bankruptcy? 

If you're in a Chapter 13 repayment plan, you may be wondering if it's possible to obtain a loan. The good news is that it is possible in certain situations. Typically, Chapter 13 plans take three to five years to complete, and during that time, you may need to get a loan for unexpected expenses, such as a car repair or replacement.

However, it's important to note that you must first petition the court for approval to incur new debt during your Chapter 13 case. The court will consider various factors, such as the reason for the debt and how the debt payments will impact your ability to repay your Chapter 13 plan. It's crucial to consult with your bankruptcy lawyer before taking any steps to get a loan while in Chapter 13.

While it is possible to incur new debt while in bankruptcy, you must have a valid reason and demonstrate that you can make your Chapter 13 payments despite the additional monthly debt. By following the proper procedures and seeking legal advice, you can navigate the process of obtaining a loan while in Chapter 13.

Best Loans for Discharged Bankrupts

Did you know that there are specific rules regarding how long you must wait after bankruptcy to qualify for a mortgage loan? If you're looking to obtain a government-backed mortgage, you'll need to be aware of these underwriting rules. Depending on the type of conventional mortgage and the chapter of bankruptcy filed, you could qualify for some mortgages in as little as two years after bankruptcy. However, non-conventional mortgage loans may be available sooner.

On the other hand, obtaining a loan after bankruptcy is much easier when applying for a consumer loan. Many lenders offer consumer loans to debtors as soon as the bankruptcy case closes. So, if you're looking to rebuild your credit and get back on track, this may be a great option for you.

When it comes to finding the best loans for discharged bankrupts, it all depends on your unique financial situation. There are various options available to you, including but not limited to:

Types of Loans for Discharged Bankrupts

If you've filed for bankruptcy, you might think that getting a loan is out of the question. However, there are several options available to you.

One option is a secured loan. By using collateral, such as a car or a house, you may be able to qualify for a lower-interest loan. Just remember that if you default on the loan, you'll lose the collateral.Another option is a payday loan. However, be cautious of ultra-high interest rates and fees. Many of these lenders advertise "no credit check loans" or "loans for bankruptcy filers," but it can be difficult to repay these loans because of the high-interest rate.

If you belong to a credit union, you may find it easier to qualify for a consumer loan through them. Credit union loans can be a great option for those who have filed for bankruptcy.

Secured credit cards are another option for rebuilding your credit. You're required to deposit a certain amount with the company to secure your charges, but it does provide a great way to have access to a credit card after bankruptcy.

If you have a family member or close friend willing to cosign a loan, you might qualify for a lower interest rate as well. Just remember that if you default on the loan, the cosigner is legally responsible for the debt.

Lastly, many online lenders specialize in assisting individuals who filed Chapter 7 or Chapter 13 in getting a loan after bankruptcy. Just make sure to read the fine print so that you understand the terms, conditions, and interest rates for these loans. Also, avoid taking more money than you need.

Getting a Loan After Chapter 13 or Chapter 7

Did you know that getting a loan after filing for Chapter 13 or Chapter 7 bankruptcy is easier than you might think? While there are some rules about how long you need to wait before you can qualify for a mortgage, you may be able to get consumer loans as soon as your bankruptcy case closes.

But before you jump back into debt, there are some important things to keep in mind. For example, if you get into debt over your head again, you may not be able to file for bankruptcy again. There are limits on how many bankruptcy discharges you can receive during a certain period of time.

For instance, if you've already received a Chapter 7 discharge, you need to wait at least eight years before you can receive another one. And if you've received a Chapter 13 discharge, you'll need to wait two years before you can file for another Chapter 13 case. So, it's important to be mindful of your financial situation and avoid getting into debt that you can't handle.

Take Control of Personal Finances

If you've gone through bankruptcy, getting a loan may be a crucial step towards rebuilding your financial stability. However, it's important to take other measures to protect your financial wellbeing.

More News Stories

May 25, 2024
12 Bankruptcy Misconceptions You Must Stop Believing

Bankruptcy can be a great way to get a fresh start when your debt has become unaffordable due to financial hardship. Bankruptcy is for those who have a strong desire to pay their bills, but may not have the ability to pay those bills.

Read story
May 23, 2024
What Is Considered Income For the Bankruptcy Means Test?

Trying to figure out if you can meet all the requirements for a bankruptcy discharge can be a challenge, especially if you don’t know where to start. The Bankruptcy Means Test form was created to help you navigate through to see if you qualify to file for bankruptcy discharge. The means test will look at your income to determine if you can qualify.

Read story
May 22, 2024
Can You File Bankruptcy While Unemployed With No Job? Understand the process

Yes, you can file bankruptcy while unemployed with no job, but please note that your unemployment income does count as income for the bankruptcy means test.

Read story