Personal Loan After Bankruptcy

Getting personal loans after bankruptcy is certainly possible, but frankly it has to be likened to hitting one's head with a hammer to make an ache go away. Yet there are very imprudent people who think drinking a gallon of water ten minutes after almost drowning is a funny joke and will scoff at warnings to stay as far as possible away from a loan company and credit card. The other side of the coin is that there are companies that will sell triple decker cheeseburgers to people over four hundred pounds and lend Mt. Everest high interest loans to those who shouldn't be borrowing a shovel from a next door neighbor. But the world can be a crazy place and everyone seems to have a reason for doing that they do. So getting loans after bankruptcy is a bad idea for most people in that position but the deed can be done.

If a person yells the word bankruptcy in a room full of bankers, at least seven of them will have coronaries within a few minutes. It is the worst of the worst financial situations, not because it cannot be overcome eventually, but because the legal proceeding has a shelf life of ten years. That is a lot of time for something rotten to remain hanging around someone's neck. And painfully, the effect of such a financial smell is known by all who loan money to those afflicted with the odor. People can argue all day long if it is fair for those who have gone through such a devastating crisis to have the large "B" branded on FICO reports for ten years. Good, honest and hard-working folks have had to go through this ordeal, some through no fault of themselves and others because of poor judgment. But in both cases, getting personal loans after bankruptcy can be tricky.

In the case of chapter seven bankruptcies, the idea of getting a loan after the proceeding is a little strange. Chapter seven legal proceedings are borrowers who are finally captured by the creditors' posse and put their hands up in surrender. Despite what the TV lawyers say, chapter seven means that most of one's possessions, if they are extensive, are going bye-bye. In each state, the list of items that a person filing for relief can keep from the auction block is varied. In some states a person can keep saddles and horses, personal items and a four wheeler for each family member while in another state a television can get auctioned but a stove cannot. And a person's house, or at least most of its equity is fair game in most states. The point is that personal loans after bankruptcy are basically going to be unsecured loans because there is little or no collateral to offer.

In the world of personal loans after bankruptcy, the unsecured is the proverbial redheaded step-child. This kind of loan is the most expensive to get because if the loan defaults, the lender has nothing to haul away in a truck for repossession. This loan holds all kinds of risks for the lender and consequently the interest rates are higher than Kilimanjaro. Yet this is basically the only kind of loan besides a car loan that these wounded borrowers can get. To add insult to injury, a finance company will probably be the only entity willing to make a commitment to personal loans after bankruptcy and their prices to borrow money might rival the GNP of San Marino. This kind of loan truly is the last thing in the world that filer's for bankruptcy need.

The other type of personal bankruptcy available for those who find themselves surrounded by the posse is chapter thirteen. With this legal proceeding, those who are throwing up their hands in debt surrender are looking for a way to repay debt on their terms and not the lenders. In other words, longer payback schedules and less interest on the loans are the usual foundations for this legal filing. In many ways, chapter thirteen bankruptcy is very much like most debt counseling programs, which provide the lower interest side, making possible the payback of credit loans within five years if the debtor sticks to the program. But in debt counseling and in chapter thirteen, the debtor cannot open another loan account or the program is ended or the filing converts to chapter seven. It's ironic that a chapter seven filer may be eligible for personal loans after bankruptcy more quickly than the filers of chapter 13.

Actually, irony runs rich when talking about personal loans after bankruptcy. The very thing that was the downfall of most people filing for debt relief is the thing that can actually help them get their good name back over time. Credit reports will have the big scarlet "B" on the information, but small, unsecured loans that are faithfully paid back incrementally on time each month begin the restore the health and vitality of a very anemic financial condition. The question about personal loans after bankruptcy being a hammer to kill a headache really comes down to does the one holding the hammer know exactly where to hit in order to stop the pounding. And can a person who has probably failed for a long time to handle credit properly suddenly change his ways and start being responsible? The great prophet Jeremiah once asked, "Can the Ethiopian change his skin or the leopard his spots?" (Jeremiah 13:23a) The rhetorical answer is no, but with God all things are possible.

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