You can still get a loan even if you are or have been bankrupt. Some lenders and other financial professionals, as well as your neighbours, friends, family, and well-meaning but misinformed people, might try to convince you that if you file for bankruptcy, you'll never be able to own a car or a house again.
That just isn't true. There are companies that only lend money to people who have been bankrupt or who have other problems with their credit.
People who have filed for bankruptcy may have to wait until the case is over or the creditors are paid before they can get a loan for a car or house, but that isn't always the case. What kind of bankruptcy you file makes a big difference.
If you filed for Chapter 7 bankruptcy when you went bankrupt, you will have to wait two years before you can get a loan. Most of the time, a Chapter 13 bankruptcy makes it possible to get a loan again as long as the debts have been paid.
It's important to know the different types of bankruptcy because they affect how quickly and under what conditions you can get a loan after you've gone bankrupt. Here's an overview.
Chapter 7 bankruptcy is used to protect your personal belongings and get you back on your feet financially while you slowly pay back your creditors. If you go bankrupt and have one or more loans, you can still pay them back on a schedule that you can afford. You dont have to default.
To file for Chapter 7 bankruptcy, you'll need to make a list of the people and businesses you owe money to. These people and businesses are called "creditors." You'll need to give the bankruptcy lawyer a list of your assets, your debts, and the property you hope won't be taken away from you.
You'll need to show proof of how much money you make and how much you spend, as well as a plan for how you'll pay off secured debts. When you go bankrupt, a trustee will take over all of your property, even if it is tied to a loan.
You or your lawyer meet with the creditors, talk about the things you can keep, and explain to the others how you will pay them back. They have 30 days to come to a decision. The creditors will then have 90 days to talk about you and your bills with the court.
The requirements for getting a loan after a Chapter 7 or Chapter 13 bankruptcy are different because in a Chapter 13 you get to keep your car, home, and other possessions.
When deciding whether or not to give you a loan, a possible lender might look askance at this kind of bankruptcy. You chose not to give up your property to pay off your debts, which is different from a Chapter 7 bankruptcy.
If the loan you want after bankruptcy is for a home or car, the new lender might remember that the lender who had your home as collateral in your last bankruptcy didn't get it back when you didn't pay.
