Borrowing After a Personal Bankruptcy
You may think that filing for a personal bankruptcy is like declaring a death sentence for your credit score. However, there is no denying that there certainly are ways you can borrow after filing for a personal bankruptcy. Ultimately, you can borrow the smart way – or you can take the path that puts you right back on the fast track towards another appointment with your local bankruptcy courts.
So when it comes down to it, how can you borrow after a personal bankruptcy? Simple: follow the tips and techniques below:
Before the Borrowing, Establish the Budget
Before you can even think about taking out a credit card or a car loan, you will need to establish a financial budget. Your credit counseling classes should have given you the tools you need to form a household budget. Ultimately, you will want to create the kind of budget that gives you plenty of surplus cash to put towards your retirement account and your savings. However, there is another purpose behind the household budget – and we will explore it below.
Take Out a Prepaid Credit Card
You may think that you will never be able to take out another credit card again, especially after filing for personal bankruptcy. Yet there’s a difference between unsecured credit cards (the traditional kind) and secured credit cards, which use a cash deposit as a balance. In exchange for a $300 to $500 deposit, you’ll be given a secured credit card with a balance that reflects the amount of money you put down. If there ever comes a time when you can’t pay your prepaid credit card, your balance will be reduced to reflect the amount you owe. Additionally, these cards are reported to credit bureaus in an identical fashion as traditional credit cards. You’ll be able to build up your credit score without worrying about getting trapped in the cycle of debt again.
Know What to Take to Lenders
After some time, you will be able to approach lenders for traditional loans again. While you will have to deal with higher interest rates than normal, the truth is that you will be approved for more loans if you know what paperwork to bring to your lenders. Ultimately, you will want to provide lenders with proof of your employment (and salary), and your household budget (this shows you can afford to pay back the loan).
Use these tips to learn how to borrow again after bankruptcy!