Can I get a personal loan after bankruptcy?

Stephen wrote in: “I need money for some extraneous expenses, but I’ve recently filed for bankruptcy. Is it possible for me to get a personal loan?”

A personal loan is an unsecured loan that has fixed payments. This type of loan can be used for any need. It is important to understand the personal loan characteristics, listed below, before applying for a personal loan.

• Since personal loans are unsecured, rates are higher.
• Personal loans have a fixed term.
• Sometimes, a revolving line of credit is offered.
• There are no tax benefits.

According to Kiplinger Magazine, personal loans are gaining popularity with credit-crunched consumers who want to consolidate debt or pay off big-ticket purchases with simple-to-use loans that don’t pack any surprises. Yes, if you have declared bankruptcy, you can still get a personal loan. However, if you get approved, you will most likely have very high interest rates or other conditions. It also helps if you have a job because lenders rarely give out unemployed personal loans regardless of whether or not a person recently filed for bankruptcy.

Lenders are hesitant to let individuals who have declared bankruptcy get a personal loan because seeing a ‘declaration of bankruptcy’ on a credit report means the borrower has previously walked away from debts. Additionally, it may be easier for the borrower to fall back into debt. The borrower may not think about whether or not getting a good credit rating immediately after declaring bankruptcy is in their best interest. Borrowers may also be so concerned with getting approved for a loan that they do not pick the right one to meet their needs, landing them right back in debt.

To get a personal loan, make sure you know your credit score. Make sure you fully understand where your credit score comes from, and ask any questions you have to your local loan officer. You can find a loan officer at your local bank. These officers are great resources. They can help you figure out if getting a personal loan is right for you. If you are approved, pay back your personal loan on time. After six months, if you have paid your bills on time, you can ask your loan company to refinance your loan. This will help you build your credit history. Getting a loan after bankruptcy is possible. But, make sure you don’t jump right into re-establishing your credit. Do your research and talk with your bank to guide you in making the right decisions. Also, don’t try to borrow too much money at first. You’re more likely to get approval on a $2000 loan with bad credit than you are for larger amounts.