Who Will Give a Personal Loan After Bankruptcy?
Bankruptcy can be demoralizing, scary and have a major impact on your life. However, if you're buried under a mountain of debt it may be your only option for a fresh start. And there are lenders who will grant loans after a bankruptcy. Most of these will require collateral to secure the loan and a regular documented source of income. The fees and interest rate they charge will be higher than if you hadn't declared bankruptcy.
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Why Would a Loan Be Granted?
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Lenders know that if your bankruptcy has been approved, those previous creditors can no longer pursue any legal means to collect the debts and you have no obligation to pay them. They also know that bankruptcy can only be declared once every seven years. If you have proof of a steady, reliable income you may qualify for a personal loan even with a bad credit history and bankruptcy. The lender knows there are no other debts on your balance sheet. And even though you've shown yourself to be a risky loan candidate, the lender has seven years to pursue collections if you default.
Terms
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The application fees, annual fees and interest will most likely be higher than for someone who hasn't declared bankruptcy, but may be lower than someone who has a low credit score and a lot of debt. You may be liable for hefty late payment fees as well.
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Secured Loans
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Secured loans are probably the easiest type of personal loan to get after a bankruptcy. Bankruptcy law allows the debtor to keep some of her assets. Those assets can be used to secure a loan. A secured credit card is another type of loan that may be available. The card is secured by a deposit made by the debtor. The deposit is kept by the credit card company as security. In most cases the deposit will not be returned until the account is closed. That deposit cannot be used to make monthly payments.
Mortgage Refinancing
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It may also be possible to refinance a mortgage after a certain amount of time has elapsed since the bankruptcy. The time varies on the type of mortgage.
Other Personal Loans
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Bankruptcy isn't taken into account with payday loans because they do not depend on credit reports. You must provide proof of employment for these instant loans. You write a check for the amount of the loan plus interest and processing fees, which is postdated to the date the loan is due. When that date arrives the loan is deposited to the lender's account. If you don't have funds to cover the loan in your checking account, you can get the loan extended for another time period by writing another check that is for the total amount due (loan principle, interest, processing fees) plus additional interest and more processing fees.
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