Being bankrupt can be one of the biggest challenges one has to face. Without enough funds to pay your bills including your home, there’s a tendency to feel helpless and desperate. Lucky for those who still have a regular job to count on but to those who just lost their job and have no one to turn to, the situation can be devastating.
So what are your chances now of taking out a new loan if you’ve filed for Chapter 13 bankruptcy? Is there a chance at all?
It all depends on your situation and where you filed your bankruptcy. The very first step you need to take is to evaluate your need for a new loan. Ask yourself if it is really necessary such as in an emergency situation. Do understand that it won’t be easy to add a new debt when you’re still paying for your past debts. Consulting bankruptcy lawyers would be most helpful so you can gain the right information on what to do or you can get in touch with your trustee and arrange to modify your repayment plan so you can still fulfill your obligations ordered by the court.
Normally in a situation like this when you have a pending Chapter 13 plan, you should not be applying for a new credit. It is because whatever income you are earning during that time, you need to pay to your creditors for the debt you owe them.
There are certain states that allow debtors to still obtain a loan even while in a Chapter 13 situation. However, you may be required to get permission from a judge and fill out documents that state your loan terms and where you are getting your funds. You may also be asked to provide proof of your budget and how it will allow you to make payments other than your current debts.
Do be wary of predatory lenders who may take advantage of your situation. Find a lender who can be trusted and who can provide you with a reasonable loan. Take the time to discuss your issues and be honest so you could convince the lender to give you a new loan.
About Chapter 13 Bankruptcy
Chapter 13 bankruptcy also known as a wage earner’s plan can take from three to five years to discharge and during this time, the debtor is required to make payments to the trustee. The trustee is normally appointed by the bankruptcy court and his job is to pay your creditors.
Under this particular circumstance, the individual can keep most of his property on condition that he or she makes regular payments in accordance to his preferred new payment plan.
Do keep in mind that this record will stay in your credit reports for years depending on the type of bankruptcy you filed. In most cases, though, it can be reported for 10 years from the date of filing and not from the date of discharge.
Credit reporting agencies are known to stop reporting Chapter 13 cases seven years after date of filing. Once the negative status is removed, a debtor should expect a low credit score owing to the lack or few number of accounts reported.
The most important thing to remember if you want to establish a strong credit status is to be committed to your financial obligations. This means you should pay your bills including those for your credit cards, auto loans, student loans and mortgage loans on time.