After completing bankruptcy proceedings, your financial situation will be very different. Although you will no longer have the threat of debt, foreclosure, and so on, some things will become harder to do. It is possible that sometime, you will want to get another loan. Since bankruptcy stays on your credit report for seven to ten years, this may be hard to do. As a result, it is important to know your financial options after completing bankruptcy proceedings.
By clearing your debts, bankruptcy says that you are unable to meet the stipulations of the loan, and you are clearing it without completing your obligation to the lender. As a result, future lenders will be more reluctant to lend to you. A personal loan is one that is unsecured – that is, backed by your word rather than by your assets. Since lenders are unlikely to trust your word, it will be harder to receive a personal loan, especially after so many defaults from bad credit debtors leading up to the recent economic crisis.
Still, though, it may be possible to receive a personal loan. However, it is important to know that your interest rate on the loan will likely be much higher than normal – lenders must do this in order to protect themselves against a future bankruptcy proceeding. As a result, it becomes even more important to budget your finances. In certain situations, it may be better to attempt to build credit back before trying to take out a personal loan, but if you are sure that you want to take out a loan, then you must be prepared. You should give yourself more room in your budget to make payments, since it will be that much more important to not miss payments. So, instead of taking the largest loan that they will give you, it may be better to take a slightly smaller loan and take your time.
Filing for bankruptcy sends a strong message to creditors, and it becomes important for you to build back your credit slowly over time while the bankruptcy is on your credit report. However, if you are sure that you want a personal loan, be aware of the risks that come with it, including a higher interest rate, and the threat of falling back into the same debt cycle as before bankruptcy.