Secure Personal Loans After Bankruptcy: What Everyone Needs To Know

Many believe that being declared bankrupt effectively ends the chance of being trusted by a lending institution ever again. But it is still possible to get personal loans after bankruptcy; it is just a matter of applying to the right lender for the right loan product.

Bankruptcy has serious repercussions, but rather than killing off credit reputations, it is seen as a practical decision (though last resort) to clear crippling debts, and requires a period of time to overcome in the eyes of lenders. While getting approval despite low credit scores is always difficult, bankruptcy puts everything on hold for a few years.

So, what is necessary to secure a personal loan when the applicant is still overcoming the consequences of bankruptcy? We take a look at some of the factors that need to be considered, and how to set about getting the loan needed.

Qualifying For Loans

Unsurprisingly, when it comes to qualifying for a personal loan after bankruptcy, the terms and conditions are far from ideal. Indeed, it is a baby step back onto the credit financing ladder, and applicants have to be willing to accept some costly compromises if they are to secure approval at all.

The principal concern for lenders is always getting their money back, and if an applicant has a good working history, then approval despite bad credit scores is always possible. Even after bankruptcy, it is possible to have financial security.

However, it is unlikely that the personal loan sum will be much more than $5,000 at a time, while the interest rates are much higher than normal in order to cover the potential losses of the lender. It is enough to return to the bottom rung of the credit ladder, but not to overhaul the financial situation completely.

Finding the Right Deal

Many lenders will happily turn down applicants who have been declared bankrupt, especially when the ruling was made only 2 or 3 years earlier. The terms offered by those who are willing to lend, make the personal loans after bankruptcy quite expensive.

But the good news is that there are some lenders who specialize in post-bankruptcy lending. The viewpoint is that applicants have no other debts, so there is little pressure to meet monthly obligations. Getting approval despite low credit scores is not really the problem; it is breaking the stigma that many lenders have.

Online lenders are known to be more open to lending to this niche of borrower, and offer more accommodating terms to those in difficult financial circumstance. That is not to say that the terms are perfect, but the personal loans offered are still highly valuable.

The Personal Aspect

It may seem like a strange tactic, but it is also important to show any lender that the mistakes of the past have been learned. Therefore, it is vital that the reasons for falling into the difficult financial situation in the first place need to be identified and addressed. So, when seeking a personal loan after bankruptcy show responsibility by applying for a small loan that is easy to repay.

It is also a good idea to close your existing bank accounts and to open a new one. This allows poor bank history to be wiped out and the applicant to begin anew. Getting secured credit cards allows a new credit record to begin. These measures are not affected by bankruptcy rulings, and makes approval despite low credit scores more likely.

Once these measures are taken, as well as an honest look at your money management habits, there is a greater chance of getting the personal loan required at terms that are affordable.

How to Get Personal Loans After Bankruptcy

Bankruptcy can turn your financial world upside down. Bankruptcy leaves an indelible mark of negativity on your credit file that can hard to escape. If you have filed bankruptcy this year, you certainly are not alone. There are over a quarter of a million bankruptcy petitions filed each quarter of the calendar year, on average, in the United States alone. There are many factors behind the rise in the number of bankruptcy proceedings – including the economic downturn and financial crisis that has left many American workers jobless.

Perhaps you are among those left looking for work without money for your bills – or maybe you have experienced a recent illness or injury that left you unable to work and therefore you became delinquent on important monthly payments – such as your mortgage or car payments. Filing bankruptcy becomes the only option for many individuals – and provides a means for them to protect their assets from foreclosure and repossession. If you have recently come out of bankruptcy – now is the time to begin rebuilding your future and improving your borrowing outlook.

Recovering Your Good Name

To begin the process of rebuilding your borrowing reputation and your good name, you should start with a personal loan. A personal loan can be either secured or unsecured, and there is a big difference between the two – mainly the amount of interest that you will pay on each. Because of your new status as a borrower who has filed bankruptcy – you should expect to pay more interest on either than the normal borrower would. Keep in mind, however, that paying a bit more interest now will help build your credit back up in order to qualify yourself for bigger loans with less interest later down the road – once you have established your newfound ability to manage your credit.

Two Versions Of The Personal Loan

A secured personal loan after bankruptcy is the easiest to obtain financial product that is available to borrowers of all incomes. A secured loan is a loan that is backed up by pledged collateral – typically your home or late model automobile. Your lender will place a lien against the property that you pledge for collateral that will be removed when you completely repay the lender. You can get secured loans from $1,000 up to $20,000 – depending upon your income and your ability to repay the lender for the money they extend to you. It is most generally accepted among financial advisors that individuals who have experienced recent bankruptcy start out at $5,000 or below for their first personal loans following bankruptcy discharge, but you may ask for more if you have a true need and are completely sure that you can repay the amount with ease.

An unsecured personal loan following bankruptcy is a bit harder to get. These types of loans are the riskiest in the eyes of the lender because they are not receiving collateral against the loan. It is most advisable to apply for the unsecured version of the personal loan with a creditworthy cosigner who will stand behind your ability to repay the lender.

Online Lenders Specialize In Post Bankruptcy Lending

You can find the loan products that are specifically tailored for your personal situation after bankruptcy on the Internet. There are many lenders who specialize in post bankruptcy personal loans that offer these loans online for borrowers at great rates that are highly competitive with traditional walk-in banks.

Three Pointers On Personal Loans After Bankruptcy Discharge

One of the most damaging aspects of bankruptcy is the damage it does to ones self-esteem. Guilt, having to take such a drastic measure, worry about unpaid creditors, all contribute to a sense of failure that is really unnecessary. You are not alone in your tribulation. You will not be the last or the first who needed to seek relief with bankruptcy or by taking a personal loan after bankruptcy. Notwithstanding all this, you must admit that the sense of relief is sublime – a good night’s sleep a blessing. And landing a personal loan after bankruptcy may add to that relief.

What Is a Bankruptcy Discharge?

A discharge is a priority within many bankruptcy agreements that acknowledges you as the borrower to be exonerated from any personal liability in the future regarding certain types of debt from the past.

Any debts qualifying under this priority are no longer your responsibility. (This lower debt load will help you get a personal loan after bankruptcy.) It does not stop there. It prohibits any creditor or their representatives from hounding you for repayment. This applies across the board, from phone calls, to letters of demand, to any means the creditor may stoop to wrest funds from you. Some debts, taxes, child support, and the like, will remain owed by you even after the bankruptcy and you will still be responsible for them. But, even at that, responsibilities are so much more easy to face. None of this will affect your ability to get a personal loan after bankruptcy.

Bankruptcy Does Not Quell the Need for Cash

Immediately after a bankruptcy, it will be hard to qualify for a number of loans. This can last for a number of years. But, if you need a cash infusion, they are not impossible to find.

Lenders do exist who are willing to lend to folks who have experienced bankruptcy. If you need some guidance, personal loan options abound and here are some tips to getting funded. Before you venture into the personal loan market – and your best bet would be the internet – be aware that there are predators out there who will prey on your low self-esteem and other vulnerabilities to take your cash and offer little in return. Trying to get a personal loan after bankruptcy with these shysters will only cause you more trouble.

ONE – Secured or Unsecured Loans

Secured loans require collateral of real value property, usually real estate or a late model vehicle. Having collateral can ease the application and lower your interest rates. Unsecured loans, while a bit harder to get, are not impossible, but they do carry very high interest rates.

TWO – Amount and Repayment

You should have a budget and this should make it easy for you to determine how much you need and how quickly you can pay it off. The more quickly you pay, the lower your cost. The more frequently you take such loans and meet their maturity, the better your credit report becomes.

THREE – Spread It Around

Once you have located a number of lenders willing to fund loans for those with bankruptcy, check their qualifications carefully before applying. Getting refused hand over fist can do your credit report even more damage. Lenders may come to see you as loan hungry. Applying to 3-5 lenders could give you the opportunity to shop for the lowest rates and the most affordable repayment terms. But again, do not reach for the unattainable, at least not right now.

Mustering up your self-confidence and sticking to the guidelines above, you should be able to get the personal loan after bankruptcy that you need.