Des Moines, IA (Law Firm Newswire) June 10, 2013 – People think that once they declare bankruptcy, they cannot get loans. They can get a loan, but not immediately.
It is possible to get a personal loan after declaring bankruptcy. However, it does depend on which type of bankruptcy was declared. Those who declare a Chapter 7 bankruptcy have the highest chance of obtaining a personal loan because their debts are completely wiped out, indicated Iowa bankruptcy lawyer, Kevin Ahrenholz.
What this means is that when an individual applies for a loan, at a later date, after a bankruptcy discharge, the financial institution sees the applicant has no debts. This makes the debtor a good risk to them, because what debts the person did have at one time, have been discharged, and there is a clean slate to start over.
The individual may also have reaffirmed their house, been able to get a mortgage and perhaps have a car – but there are no other debts, like there were prior to declaring bankruptcy. This makes someone applying for a loan look pretty good to credit officers in a bank or credit union, as it means the debt load after bankruptcy is nil to minimal. There are numerous options open to those who have been through the bankruptcy process and have been discharged.
The individual is still obligated to give them the initial court documents when the bankruptcy was filed, as well as the final discharge papers. Many financial institutions will offer mortgage loans to those who have been out of bankruptcy for at least two years. This gives the debtor time to prove they have their finances under control, and shows the lending institution they are making a solid effort to manage money. Over that two year period, the debtor should plan to slowly rebuild their credit history.
One of the things that can help re-establish credit even faster is to put money in the bank, even if it is $700. Then, get a secured loan for $700 and pay it back as soon as possible. This proves a debtor is capable of repaying a loan and helps increase their credit score, and money is loaned based on credit score.
If there was a medical event and the individual was unable to pay their debts because of the medical bills, those lending money look at the whole credit track record and are able to tell if there is a history of repeated late payments or whether some major event happened to upset the ability to pay. These things make a difference to potential lenders, and they do not just arbitrarily say no. A person’s whole credit picture is taken into account.
Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact an Iowa bankruptcy attorney, Iowa bankruptcy lawyer, or set up an appointment, visit http://www.iowachapter7.com or call 1.877.888.1766.
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Des Moines, IA 50309
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