Bankruptcy Loans For Chapter 7 and 13

First of all, if you have not declared bankruptcy yet, then you will need to be aware of the difference between Chapter 7 and Chapter 13 bankruptcy. For the purpose of this article I will assume that you know the difference already, or will research that before filing of course, and I will simply refer to them as Chapter 7 and Chapter 13. Now, let’s move on to the most important details about bankruptcy loans.

It is possible to apply for and be approved for bankruptcy loans while you are still paying off a Chapter 13, but only if you have shown your willingness and ability to be financially responsible. Potential lenders will always check to make sure you have been paying off any debts you still have, and whether you paid them on time, before even thinking about a bankruptcy loan in your situation.

What To Expect

This will most often include the 12 months preceding the bankruptcy but it will vary among lenders. You will also be asked to give an acceptable explanation on why you declared bankrupt in the first place and obtain the court trustee’s approval in writing, before moving forward with the loan process.

Chapter 7 puts you in a much tougher situation than mentioned above, due to the specifics of the deal you made when filing, but it does not make it completely impossible to receive bankruptcy loans. For example, you must wait at least 24 months from the date of discharge, which is different from the date of filing, and this can often be a disincentive for most people contemplating Chapter 7 bankruptcy.

Help With Loans & Bankruptcy

As with Chapter 13, you will also be asked to explain in detail why it is that you have declared bankruptcy. There are many more downsides to filing Chapter 7 but, as I mentioned earlier, I am assuming that you know the difference already and you are aware of the overall situation.

In both situations, Chapter 7 or Chapter 13 bankruptcy, you must make sure you have re-established good credit and show to the best of your ability that you are a financially responsible person. Obviously this is usually done by paying off all bills in a timely manner, having a stable job with decent income, and by reducing the amount of debt you are currently paying off.

Of course, this is easier said than done but most if not all of these things will be checked by potential lenders before any bankruptcy loans are approved. Last but not least, I should mention that when it comes to this kind of loans, all of them are considered high risk regardless of the loan amount. You will get the same heavy screening whether you are applying for bankruptcy car loans or even a mortgage. Well, not really, but let’s just say that it will be tough either way.