Perseverance and patience come into play when you need financing following a bankruptcy. Scout out and compare all the possibilities to find the best loan for you. Lenders extend financing based on factors from your past, such as what type of bankruptcy you filed, how long ago it was filed or discharged and the reason for your bankruptcy. Current considerations include the size of your down payment, present credit score and debt ratio.
Two years after a Chapter 7 bankruptcy has been filed, most mortgage companies may be willing to finance a mortgage for you. For a Chapter 13 bankruptcy, your repayment must be complete before you can secure a mortgage. If your credit score has recovered and you have a good work history and a low debt ratio, consider submitting a letter of explanation with good reasons why your bankruptcy happened. Some mortgage companies may finance you immediately following bankruptcy at a higher rate of interest. Visit your local mortgage broker and explore your options.
Auto Finance Companies
Finance companies that specialize in auto financing for people with bad credit, such as Car Credit Hero, allow you to apply discreetly for an automobile loan online. You hear back quickly regarding your pre-approval or denial. While approval is not guaranteed, these companies specialize in helping credit-challenged individuals find financing for a new car. This includes those with a former bankruptcy on their record. Many of these companies sell the car and finance it for you, such as Drive Time. These companies help you improve your credit by reporting your consistent payment history to the credit-reporting bureaus.
Buy Here, Pay Here Used Car Lots
Buy here, pay here used car lots finance the cars they sell. They will work out a down payment, trade agreement (if any) and a payment schedule on the vehicle you choose, regardless of almost any credit situation. You make payments directly to the car lot, not to the bank. These loans do not always help you improve your credit, because these lots rarely report your payments to the credit bureaus. But you can often find approval here when other sources fail. Visit car lots with the "buy here, pay here" statement on their sign.
Small-Business Loans After Personal Bankruptcy
In spite of a personal bankruptcy, if you currently generate a steady income, you have a low debt ratio and you pay your bills on time, banks may be willing to lend you money for your small business, even if you have a personal bankruptcy in your credit background check. If banks balk, you may be able to secure your business loan through a small-equity investor. Consider offering the potential lender equity in your business to attract the financing you need.
Credit card companies will bombard recently bankrupted individuals with offers for cards almost immediately following their bankruptcy. The terms of these credit cards can be expensive, but this is your easiest, quickest path to a better credit score.
- Car Credit Hero: About Car Credit Hero
- Buy and Pay Here: Advantages of In House Auto Dealer Financing
- MSN Money; Bounce Back Fast After Bankruptcy; Liz Pulliam Weston; February 2009
- MyFico.com. "What’s in my FICO Scores?" Accessed May 21, 2020.
- MyFico.com. "What Are the Different Types of Bankruptcy and How Is Each Considered by My FICO Score?" Accessed May 21, 2020.
Malinda Zellman has instructed computer, ESL and GED classes. She is a retired homeschooler and school librarian. She is contributing author for two books, "Games" and "Crafts," by Group Publishing. She has written for print magazines and websites. She holds two BA degrees, business administration and economics, from Rollins College.