Debt can be a cyclical problem. You might be able to get on top of your bills one month but fall into a hole the next. Whether it is due to growing medical bills, a lost job, poor budgeting or misspending, no one wants to be in debt. However, many are in debt because they do not have the money they need to pay for necessary costs and bills.
Thus, when you decide that bankruptcy is your best option, you can’t help but question your options to address your financial needs and the impact a bankruptcy filing has on your credit. Furthermore, you fear that a bankruptcy on your record could prevent you from obtaining a personal loan or mortgage.
Chapter 7 bankruptcy
The impact bankruptcy will have on you could be dependent on the type of bankruptcy you filed for. When filing for Chapter 7 bankruptcy, you should be prepared to liquidate your assets. This type of bankruptcy requires you to liquidate all your assets except those that are exempt. This typically includes cars and furnishings. Furthermore, in order to file for this type, your income cannot exceed a certain designated amount.
Chapter 7 bankruptcy will impact your credit score, and it will likely remain that way for up to 7 years. While this process helped to discharge your debt, your debt can still affect you. Although the balances owed are no longer shown, they remain on your credit report.
Getting a personal loan
If you are asking if you can get a personal loan following bankruptcy, the short answer is maybe.
The answer is often dependent on how long it has been since you filed, what your current credit score is and what measures you have taken to better your credit. Additionally, the type of loan you seek, especially the amount, is very significant. It is suggested that you wait at least two years after bankruptcy to apply for a loan.
If you do qualify for a personal loan, it is important to note that you will likely have to pay a higher interest rate. Additionally, you may have to pay other fees, especially if the bankruptcy was recent.
Navigating life after bankruptcy is sometimes just as complex as navigating the bankruptcy process. Thus, it is important that you gain a better understanding of the process and how it will impact your life now, during the process and after it is completed.