The stigma that follows those who have been made bankrupt by the courts is still quite strong, but it not as much so as it once was. There was a time, for example, when it effectively ruined an individual, forcing those branded with the status to move away to somewhere they were not known to start fresh. Today, however, post bankruptcy loans exist, making it possible to get back onto ones feet almost immediately.
The traditional idea surrounding loan applications after bankruptcy is one of doom and gloom, with lenders hardly thought to be willing to risk their money on those declared bankrupt. However, because even fully employed people can suffer that fate, the ability to repay loans is not necessarily gone.
The truth is that getting loan approval despite bankruptcy is much easier than would seem plausible, though there are factors that do need to be considered before any such approval can be secured.
No Other Debts
Bankruptcy generally relates to debts that have little to do with day to day living so, outstanding utility bills are not going to be affected. What this means is that there can be some debts still standing even after the ruling. For that reason, post bankruptcy loans are generally only granted to applicants who have little extra debts to worry about.
It is possible that loan applications after bankruptcy are successful even if there are some taxes due or child support to be paid. But, if an applicant has little or no outlay, then loan approval, despite bankruptcy, is understandably much easier.
This is an obvious factor that comes into the equation. It is very difficult to get a post bankruptcy loan if the applicant has no employment as there is no regular source of income. With a source of income it is possible for the lender to organize payment directly from a bank account, or even from the employers, thus practically guaranteeing repayments are made. Any loan application after bankruptcy is greatly strengthened by that kind of option.
However, there does need to be confirmation that the employment is full time and dependable. This security is something that can be provided through a letter from an employer, for example, stating that employment is not just casual. Once an income is guaranteed, getting loan approval despite bankruptcy is almost assured.
There is a certain length of time that must pass before anyone can file for bankruptcy a second time, and this is something that is considered very important when lenders are offering post bankruptcy loans. If an applicant has recently been made bankrupt and is, therefore, well within the permitted time frame, then a successful application is more likely.
This is because the applicant will not be able to file for bankruptcy, a tactic used by some to have large debts written off for a fraction of the sum owed. When considering a loan application after bankruptcy, the timing of the application is, therefore, significant.
If an applicant is outside the closed period, then there is the risk that bankruptcy may be filed for again, and should there be a history of that kind of behavior, then the chance of getting loan approval despite bankruptcy are practically zero.
Lenders are no fools when it comes to loan approvals, so even if the existence of post bankruptcy loans seems a little unusual, there are real reasons why they are issued. And for those who have suffered the stigma of being declared bankrupt, they provide a valuable avenue towards redemption.