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.