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Will Bankruptcy Completely Kill Your Chances of Getting a Loan?


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Filing bankruptcy does not end the possibility of obtaining a personal loan. In fact, a person who files bankruptcy can obtain a bad credit personal loan in as little as 30 days after the discharge of the bankruptcy. And since they cannot file for another bankruptcy for seven years, this provides insurance for companies that are willing to take a chance on someone with bad credit knowing that they have legal recourse to recoup the amount of the loan.

Many traditional lenders won't lend money to someone who has filed bankruptcy, but there are other lenders who cater to those who have filed bankruptcy. Even though individuals who have filed bankruptcy have been counseled at the time of their filing on financial management and responsibility, there is no law that says they have to follow the advice.

After a bankruptcy is discharged, individuals are free to go out and take out bad credit loans as they please and there are companies that flock to them.

Bankruptcy records are public record and the availability of these records is suppose to be a sort of punishment for an individual's past irresponsibility. However, the potential exposure of an embarrassing bankruptcy is no deterrent for some seeking a bad credit personal loan. Even though the bankruptcy laws have changed over the years, there are still some who repeatedly go into debt and file bankruptcy every seven years or as the law allows.

Multiple Bankruptcies Don't Matter

Anyone can apply for a bad credit loan no matter how many times in the past they have filed for bankruptcy. There are stipulations within the laws on who can offer bad credit personal loans after bankruptcy and the interest rates that can be charged, but there are no laws that govern who can obtain these types of loans. Many who file bankruptcy are willing to pay the higher interest rates of these loans in order to find financial help.

Most lenders who offer these bad credit loans don't even require collateral for these risky loans. The reason being is that the recourse available if the loan is defaulted upon is wage garnishment of the person who took out the loan. When a person defaults on a loan a court typically orders repayment of the loan and any costs associated with collecting the loan. This makes the bad credit personal loan business very profitable for the lenders who offer these types of loans.

Many times the cost of collection is equal to the amount of the initial loan and then you tack on court costs, attorney fees and collection agency fees and this is a very costly endeavor for the delinquent creditor.

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