Debt can be overwhelming. It has the tendency to grow and get worse, causing individuals and families to wonder when or if it will ever end. And when bankruptcy is one’s best option, thinking about life after bankruptcy can feel overwhelming and even confusing. The ability to make major purchases, such as a car or a home may seem out of the picture; however, it is still possible to secure personal loans following a Chapter 7 bankruptcy filing.
Securing a personal loan
When an individual decides to file for bankruptcy, this will impact his or her credit score for up to ten years. When one’s credit score is hit and there is a bankruptcy on his or her credit history, it can make it challenging to obtain a personal loan; however, it is not impossible. While it can be difficult to get a personal loan, if one does secure one, it is very likely that they will assume higher fees and higher interest rates.
Increasing chances of qualifying
When applying for a personal loan following a bankruptcy, there are five factors to consider. First, the type of bankruptcy one filed for. Compared to a Chapter 13 filing, it is easier to apply for a loan after Chapter 7, as it takes less time to discharge one’s debts. Next, when the individual filed for bankruptcy is a factor. A Chapter 7 filing remains on a credit report for 10 years.
Third, one’s credit score and history is considered. It is possible to repair one’s credit after filing, so after some time, one’s credit score could help with an approval and a better rate. Next, one’s income is considered, as it can establish what one can afford and determine how much to lend. Finally, the type of personal loan is a factor. There are two types, which as a secured or unsecured. With secured loans, collateral is required while collateral is not required for an unsecured loan.
The decision to file for bankruptcy is not an easy one. It is a process that should not be pursued without fully understanding the process and the aftermath of it. Life must still go on during and after bankruptcy; therefore, it is imperative to take the time to gain insight on ones options when it comes to one’s financial future and how a bankruptcy might impact it.