It’s Tough To Get A Loan After Chapter 7 Bankruptcy
Getting a loan after filing bankruptcy is not as easy to obtain as before the case was filed, and it depends on what kind of loan a person is seeking just how difficult the process will be. Once a discharge of the Chapter 7 bankruptcy or 13 has been granted, the debtor must reestablish credit, and the first step will probably be a secured credit card. A secured card is given by the bank, and is secured by whatever amount of money the cardholder deposits in an account for that purpose. Charges are then limited to the amount deposited, which helps avoid running up too much debt again, but allows the positive credit experience to be reflected in one’s credit report. This step helps make the debtor eligible for a loan.One of the consequences of filing bankruptcy is that if the bankrupt person wishes to buy a house in the future, there will be a two-year wait after the Chapter 7 case is discharged before he will be deemed eligible for a home loan. When a Chapter 13 Bankruptcy case is involved, the wait is twenty-four months after the debts are paid off in full. During that two-year period, the loan applicant will need to have been employed steadily, have no negative entries in his credit file, and kept debt under control. If a person is able to make a large down payment of 15% to 20%, there will be no problem getting a home loan. For less than that, the interest rate will probably be high. If a borrower has to get a loan at a higher rate, two or three years of a perfect payment record may make a lower interest rate possible through refinancing.
