Bankruptcy can definitely give your credit file a stigma that lasts for a very long time.
However, there are some advantages to filing bankruptcy.
You rid yourself of debt that you are unable to pay.
And you suddenly appear as a borrower who owes nothing to anyone.
In the eyes of potential lenders, you are a diamond in the rough.
Just how do lenders see your new financial situation? Your New Image While bankruptcy is a serious matter that should not be dealt with lightly, borrowers who are discharged from bankruptcy appeal to a certain group of lenders.
Some lenders actually specialize in post bankruptcy lending.
Why do they take the risk and what type of post bankruptcy borrowers do they look for? Let us look at your situation from the eyes of the lender.
As mentioned before, you are now a potential customer who owes nothing to anyone.
And you likely have a job.
Since there are limits to the number of times that a borrower can file bankruptcy within a certain period of years, these lenders know that you are far less riskier than someone who has the option of declaring bankruptcy - because you no longer have that option (or at least you will not have the option to do so during the term of the loan that they will write for you).
And since you are gainfully employed, lenders know that they can always garnish your wages if you fail to meet the terms of your loan.
While not all borrowers are viewed in this light, those borrowers who have a history of steady employment with the same employer for five years or more are considered optimal customers for these types of lenders.
Yes, they want your business.
Qualifying For Loans The loans that you can qualify fresh out of bankruptcy are not substantial by any means.
But you can borrow money if you have a good work history.
Most loans are signature unsecured loans of less than $5,000.
But these loans are a good jumping off point for building (or rebuilding) positive credit history.
And by being a good steward of the credit that you are a recipient of after your bankruptcy has been discharged, you can greatly improve the look of your overall financial picture and begin qualifying for better loans, including those that are needed to purchase a home.
You can speed up your financial recovery following bankruptcy by not only making timely payments on the loans that you establish, but also by closing your existing bank account or savings account and opening new accounts.
You should also establish two or three secured credit card accounts, and use the credit available on those accounts sparingly.
Additionally, you should take a hard look at the reasons that led you to file bankruptcy in the first place.
Do you tend to overindulge or even have a spending problem? Do you have a hard time balancing a budget? Discovering the behaviors that led to your financial downfall can help you avoid the same mistakes again and make your financial future brighter.