Getting your financial health back on track by filing for bankruptcy is possible. However, when you do this, you may be limited financially for the short term. For example, it may be harder for you to be approved for loans or credit after filing.
If you need a personal loan after filing for bankruptcy, it may be approved. The amount of time it will take to get the loan depends on the type of bankruptcy you choose and how long it has been since you filed.
Chapter 7 vs. Chapter 13 bankruptcies
If you file for Chapter 7 bankruptcy, it will remain on your credit for 10 years. A Chapter 13 bankruptcy will fall off your report after seven years. You may think you cannot get a loan until after that amount of time but this is often not the case.
The first step is to search for lenders that specialize in providing loans to those with poor credit. Be sure to compare different offers and rates to find the right deal. You can reach out to the lender to determine the minimum credit score and determine if they provide loans to individuals with bankruptcies in their history.
It is also wise to apply for pre-qualification. This step does not impact your credit (in most cases), and you can know what you can borrow without impacting your credit score. After you are prequalified and find the right loan, you can submit the official application. The lender will submit a final offer, and you can decide if you want to accept it.
Is taking out a personal loan after filing for bankruptcy a good idea?
No one’s financial circumstances are the same. Receiving a personal loan and repaying it can help you improve your credit rating and show that you can borrow and repay the money on time. Bankruptcy is a way to get a fresh financial start; however, understanding its full impact is important.