Many people who have not experienced bankruptcy will probably think I am crazy writing this page. However, there are several occasions when a loan may be justified.

Buying a house and business purposes are good examples. Furthermore, an individual who has been bankrupt in the past is not eliminated from needing or qualifying for a loan in the future.

Therefore, I provide the information below.

The first step

The first step towards getting a loan should happen well before you know you need one. It would be best if you got credit worthy again. Given that bankruptcy is highly damaging, this will take some time. That is why you should start early, probably as soon as you are discharged.

Getting creditworthy

The best way to get credit-worthy again is to obtain and manage credit responsibly. I have written a lot about this subject. See the credit after bankruptcy page for more information.

Deciding whether you need a loan

It’s time to be honest with yourself. Unless you have a legitimate reason for a loan, try to save for the purchase. Buying a house or a reliable car for your new promotion at work may be justified reasons. A holiday is probably not. The reason for the loan is essential, regardless of who is applying. You will almost certainly not need a loan if you are bankrupt.

Affording the loan

Above all else, you should do your maths. Be sure that you can afford the loan now and if your income drops or there are unexpected expenses. Consider any expected changes, such as starting a family, and factor these into your decision. Depending on the type of loan you are applying for, the lender may require insurance or a sensible option.

Preparing for the loan

In addition to getting creditworthy, you may take steps to increase your chances of getting the loan. If you are applying for a mortgage, a larger deposit and a well-paid, stable job will benefit you. Conversely, making many credit applications, having no deposit, and having an unstable job will not help you. This needs to be thought of well in advance. Research carefully what the lenders want. There is an abundance of information on the credit after bankruptcy page.

Knowing where to get one

Several factors will determine where you will need to go for your loan. The most likely scenario is a specialist mortgage broker.

Applying for a loan

Your application will be in a format specific to the lender. They will expect to receive the information that they ask for. A common question asked is whether I should disclose my bankruptcy. As always, do not lie. If you are asked about your adverse credit history, provide the information you are requested. Lenders take a very dim view of non-disclosure. Those who lie can get in trouble with some nasty marks on their credit report. Further to this, lenders often have access to shared information.

Loans to Avoid

Of course, some loans should be avoided. These would be those associated with the not-so-nice side of lending. Payday loans are a good example. Other loans that should be avoided are those you do not need or are not yet creditworthy enough to apply for. If you receive several refusals on credit applications, your credit rating can be further damaged.