So you’re seeking a personal loan after bankruptcy, are you crazy? Wasn’t the process of going through bankruptcy enough to make you swear off ever taking on additional debt?
Unfortunately, many people make this same mistake, and because they fail to address the spending behaviors they quickly end up in a similar mess in a fairly short period of time. But you are determined to get that loan aren’t you?
"The highest use of capital is not to make more money,
but to make money do more for the betterment of life."
- Henry Ford |
Four important factors affect your eligibility if you wish to get a personal loan after bankruptcy. A clear understanding of these factors is necessary to get an idea of your chance of success in this ill-conceived endeavor.
Before dwelling upon all these factors let us discuss why you want to get the loan at all when you have already gone through a bitter experience regarding debt.
Why Do You Need Loan?
There are many things in life that make you feel forced to opt for going back into debt. You may need a loan to fix or replace your car. If your home needs repair then you also may need additional money.
Obviously, the best solution in these situations is to defer the decision until you become capable of buying the item with cash. However, if you are unable to resist the temptation then you can opt for a personal loan after bankruptcy.
Your Credit Score
Your credit score is the first factor that affects your eligibility to get a personal loan after bankruptcy. Usually, the lenders define a minimum limit for the credit score and you can get the loan only if you satisfy this requirement. You won’t!
Moreover, this is only possible if the lender is even open to the idea of lender to someone with bankruptcy in there recent past. If we presume that the lender is ready to give you the personal loan after bankruptcy then you can assume you’ll be paying through the nose on interest rates and fees.
Availability Of Collateral
One more important factor affecting the eligibility to get a loan is collateral. Availability of the collateral greatly increases the possibility of obtaining a loan because lenders feel this loan is less risky.
In case of default, the lender can go after the collateral to offset their loss.
Existing Loans
How much money you owe at present to the other lenders is also a factor that affects the probability of obtaining a personal loan after bankruptcy. If you owe too much money then the chances are that the lender might refuse your application because in his opinion you may not be able to make the repayments on time.
Time Factor
Finally, time is also an important factor that can greatly enhance the possibilities of getting a personal loan after bankruptcy. If the lender feels that you have been making regular repayments of your loans after the declaration of bankruptcy then he may adopt a positive approach and advance you a small loan.
Time is really the key criteria. The further you are from the time of your bankruptcy, assuming you’ve had no bad credit history since, the better your chances are of establishing any sort of credit relationship.
Whatever the reason, try to avoid taking on an new debt after bankruptcy. Focus instead on creating new streams of income that can be there to take care of those unplanned for expenses.
Debt is dumb. So get smart and start focusing on the income side of your financial equation.
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"Never spend your money before you have it."
- Thomas Jefferson |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
