Finding an after bankruptcy loan is not always as hard as you might imagine it to be. However, finding a good value after bankruptcy loan will be a problem!
The problem is, bankruptcy stays on your record for up to 10 years. This means that all future creditors will be able to see the bankruptcy on your report and that will likely put them off lending you the money. If it doesn’t put them off it will cause them to think about the risk involved if they do lend it to you. This risk is often reflected in the interest rates that you are offered.
Understanding after Bankruptcy Loans
Some lenders may look at how long ago the bankruptcy was. Obviously if you were made bankrupt seven years ago and you now seem to be doing well, creditors will be more likely to lend you money. A select few will still judge you for your past mistakes, but many lenders will be more open to giving you the finance that you need. The problems mainly come when the bankruptcy has been fairly recent.
No lender will give you money straight after you have been declared bankrupt. So you will have to wait at least a few years before you apply. That is unless you can get a guarantor for the loan. Some lenders will accept a guarantor who basically agrees to pay the loan if you fall behind on your repayments. Not all creditors will accept this but it is worth looking into if you need the money and you have somebody who is willing to act on your behalf.
There are ways in which you can increase your chances of being accepted for a loan after bankruptcy. One of these includes improving your credit score. You can do this in a number of ways including applying for a credit card, spending a small amount and then paying it off in full by the end of the month. As you do this it will slowly increase your credit rating. You should also aim to pay off any existing debts. Creditors will be more likely to lend money to those who have cleared their bankruptcy than to those who are still paying the debt off.
Overall it will all depend upon what your current circumstances are as to whether a creditor will lend you the money that you need. It will obviously help if you have been free of debt for a long period of time and if you have a Chapter 13 bankruptcy on your report rather than a Chapter 7 bankruptcy. It will take time, but there will always be a creditor who is willing to lend you money. The only problem is that it will likely come with a high interest rate.
