Bankruptcy has its consequences. While it provides relief for borrowers who cannot pay their debts, it can negatively affect your finances in a lot of ways. But, if you know the four important factors to consider when getting personal loans for bankrupts, you can easily navigate your way back to financial stability.
Your credit score
The first step in getting personal loans for bankrupt is to check your recent credit rating. It tells you and your potential lenders about your creditworthiness based on your credit history.
While bankruptcy is bad for your credit rating, showing that you have been faithfully paying all your loan obligations can gradually improve your credit rating. You may be offered a more attractive deal as you will be considered less risk to the lender. Just request for a copy of your credit report from the credit reporting agencies and you can take it from there.
Check if your specific circumstances qualify you for attractive APRs. Are there pre-requisites to a loan such as existing credit card from a current card issuer, membership or loyalty card, and the like?
How much loan can you afford to repay? It is enough that you know how much you are entitled to receive. What matters most is your ability to pay your debt. If you can’t pay for it today, how can you pay for it in the next month or so? If you’re still having difficulties in borrowing and repaying the loan, take a step back. Create a budget and make sure that you can afford the monthly instalments.
When choosing a loan, it is important to determine the amount of loan which is sufficient to meet your needs. Large loans often come with lower interest rates. So, if you can afford to pay it, choose larger loans with favourable APRs. If you are going to borrow a smaller amount, look into other loan options that offer lower interest rates.
The negative effects of bankruptcy
Firstly, since you’re deemed not in control of your finances, a trustee will manage your finances to ensure that you can settle all your outstanding obligations, in a fair and reasonable manner. Second, there are some restrictions when it comes to employment and engaging in business. Third, while you may no longer have to pay for your unsecured debts, you still have to pay your secured debts and other financial obligations. The public will know that you have filed for bankruptcy because your name is listed in Australia’s National Personal Insolvency Index.
Bankruptcy affects your ability to get approved for loans. It may send a warning signal to lenders that you may not be able to repay the loan if approved. But, if you can show that you have gradually established your credit right after you went bankrupt, it can be interpreted as a good sign that you are making wise changes in your financial management.
Learn more about getting personal loans for bankrupts by calling Australian Lending Centre on 1300 138 188 today!