Getting a loan after bankruptcy is not impossible. It is in fact quite possible to get a loan after a bankruptcy. However, the borrower must understand that it is not going to be easy. It is not going to be simple because lending institutions are still very wary of giving loans to people who have declared bankruptcy. This is because they want to be protected in the event that something goes wrong. They want to be protected in the event that the borrower fails to pay his or her loan back.
After Debts Are Discharged
A borrower who declares bankruptcy must first provide a copy of the papers that were filed with the bankruptcy court. The borrower must also supply a copy of the order from the bankruptcy court stating that the bankruptcy has been discharged. The lender must consider the borrower’s ability to repay the loan. The lender must consider the borrower’s income, assets, and current liabilities. They must also determine if the borrower has too much debt. If the borrower has too much debt, the lender must take the borrower’s debts and assets into consideration. They must then determine if the borrower can handle the new debt that they will be taking on if they are approved for the loan. If the borrower has too much debt and bad credit, they might still be approved for a loan if the loan is asset backed. This is a loan that is secured by assets. Even still, some lenders do have an outright ban on lending to bankruptcy filers until a certain period of time has passed. So its important to discuss the lenders guidelines early in the process to make the most of your lending search.
For instance, if the borrower has a house that is worth $200,000, they may be able to get a loan for $200,000 because the house will serve as the collateral, although most lenders don’t lend up to the full value of the collateral. If the borrower has too much debt and bad credit, the lender will assess the borrower’s credit history. They will determine the borrower’s ability to repay the loan. They will then take the borrower’s income and assets into consideration. If they determine that the borrower has a high likelihood of being able to repay the loan, they may be willing to grant the loan. A lender will want to make sure that the borrower can repay the loan. The lender will want to make sure that the borrower will not be put into a worse financial situation because of the loan. They will want to make sure that the loan will not cause the borrower to fail to pay his or her other bills.
Of course, the borrower should also be wary. Not all loans are alike, and many may not carry the best terms or financial incentives for the borrower after bankruptcy. Take time to shop around after working with your Roseville bankruptcy lawyer to discharge your debts. Once you start with a clean slate, make it count and find the best loan for your financial situation as you build your credit profile.