Bankruptcy is more prevalent than you would expect. According to the Judicial Officer of the United States Courts, 772,646 bankruptcy lawsuits were registered in 2019. While bankruptcy may help you gain some debt relief, this is not a one-size-fits-all answer to your financial problems. While you’re recovering, you could need a loan to help you expand your company or get back on your feet financially.
You may find yourself at the expense of creditors and financial institutions if you file for bankruptcy, particularly if you intend on acquiring an unsecured loan, but this is not an impossible condition. As a result, we’ve put together a quick guide to everything you need to know about obtaining a post-bankruptcy loan.
What does it mean for your credit score if you file for bankruptcy?
Understandably, filing for bankruptcy has an effect on your financial records. To begin with, your credit score will surely drop. According to our analysis, a person with a credit score of 680 may lose up to 150 points if they declare bankruptcy. Meanwhile, those with above-average credit scores, such as 780, would see their credit score plummet by 240 points.
Furthermore, bankruptcy records will remain on your credit history for 7 to 10 years, depending on the kind of bankruptcy you declare. However, declaring bankruptcy is frequently the best way to deal with overwhelming debt and protect your financial future, so don’t let a reduction in credit scores dissuade you from taking the necessary steps.
According to Federal Reserve Bank of New York studies, credit scores may increase by up to 80% after declaring bankruptcy. So, although bankruptcy may initially harm your credit score, you will be able to recover over time.
Is it possible to acquire an unprotected personal loan after filing for bankruptcy?
Despite the stigma, the quick answer is yes. But it’s not likely to be that simple. Lenders utilize a variety of characteristics to decide whether or not you’re qualified for a loan. But, since indebtedness became an American way of life, you can always find a way to meet your financial objectives, whether or not you have a bankruptcy on your record.
You may quickly apply for fast loans online to settle debts, pay off credit cards, or finance significant expenditures. Choose from several reputable lenders and use them right now.
Lenders will first look at the sort of bankruptcies you filed. People who petition for bankruptcy have two options: Chapter 7 or Chapter 13. The primary distinction between Chapter 7 and Chapter 13 bankruptcy is explained in our ‘Chapter 7 vs. Chapter 11 bankruptcy Bankruptcy’ summary. Chapter 7 bankruptcies liquidate unprotected assets to pay creditors, but Chapter 13 bankruptcy allows you to pay off your obligations over time via a court-approved payment plan.
This kind of bankruptcy matters because a Bankruptcy filing may stay on your credit record for up to 10 years, but a Chapter 13 bankruptcy can remain on your credit report for up to 7 years.
Furthermore, the date on which you filed for bankruptcy is significant. It’s more challenging to receive an outstanding loan if you haven’t found steady employment and have just filed for bankruptcy.
Finally, your current credit score matters the most when it comes to securing a loan since it determines the payment plan and interest rates for your unsecured loan. However, repairing your credit history after bankruptcy is extremely achievable – paying your payments on time, including using your credit or debit card responsibly, are two tiny but essential steps toward rebuilding your credit score.
Before you qualify for a post-bankruptcy loan, keep these things in mind.
Naturally, unscrupulous lenders will reap the benefits of your post-bankruptcy status and provide you with unsecured debt with a higher annual percentage (APR). While this may sound appealing, particularly if you’re in a hurry, taking out unsecured loans from questionable lenders can worsen your financial situation. It could be beneficial to seek outside assistance to assist you in making a wise selection.
When you’re attempting to restore your money, hiring someone now may seem counterintuitive, but a financial adviser might be an excellent investment for your new start.
Indeed, Maryville University notes that the financial industry is expected to rise by 30% between 2014 and 2024, which is understandable. Talking with financial consultants may provide you with much-needed insight into your financial situation. They may also assist you in learning more about how to improve the terms of your loan.
Furthermore, the US Government has deliberately designed bankruptcy rules to assist individuals in regaining control of their finances after being enslaved by debt. While it may be tough to rebuild your life after bankruptcy, you also have a chance to receive a private loan to help you with your financial problems – Algernon Ronson of OakParkFinancial explained. All you need to do is arm yourself with the correct knowledge and assistance and avoid transactions that will jeopardize your financial situation.
