Attorney at Law
Getting Loans After Bankruptcy
People often ask me whether they will be able to get credit after bankruptcy. For the most part, I believe that concerns about bankruptcy preventing you from being able to get loans are exaggerated, with two exceptions. First, home loans are difficult to get after bankruptcy, and mortgage brokers I know have said that most mortgage companies are looking for about two years of substantial, responsible credit usage after bankruptcy before they will consider you for a loan. The reason is that mortgages are big loans and the foreclosure process is a very long and expensive one-- creditors, especially these days, do not want to take a risk on someone they do not feel 100% about.
The other area where it is more difficult to get credit is normal credit cards from banks. Store credit cards like those from Best Buy and Home Depot are easier to get because those stores are trying to get you to buy their goods, but unless your income is quite impressive you are not going to be able to get a $10,000 unsecured credit card right out of bankruptcy. Credit cards have high interest rates for a reason, which is that a lot of people end up not paying. You will have to work hard at rebuilding your credit to earn your way back into the credit card company's good graces. For more information about that, read my article, "Repairing Your Credit After Bankruptcy."
Car notes are surprisingly easy to get after bankruptcy, and in fact you will probably be solicited by car financing companies about new auto loans before your bankruptcy is even over. The reason why is that these are fairly low-risk loans for financing companies, and come with a high interest rate. The loan company knows you can't file Chapter 7 bankruptcy again for 8 years, and has access to a complete snapshot of your financial life because that information is contained in your bankruptcy petition. Furthermore, because you don't owe any money to anyone anymore, the creditors don't have to worry about you being garnished or them having to wait in line behind some other creditor before they can get paid. In the worst case scenario, if you don't pay they will repossess your car, sell it at auction, and come after you for any remaining loan balance that could not be satisfied out of the proceeds of sale. Obviously this isn't what you want to happen, but the point is that the creditor knows that, one way or the other, they are almost certainly going to get paid.
If you have any questions about obtaining credit after filing bankruptcy, please contact me at 440-544-6423 and I will answer those questions at no initial cost to you.