Tag: bankruptcy

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Business Loans

Business Loan Despite Bankruptcy

business loan despite bankruptcy

Bankruptcy is a highly dreaded word in the realm of financing and getting a business loan despite bankruptcy is a bit difficult. Even though it is dreaded, many people end up in a situation in which filing for bankruptcy is the only solution they have. Nonetheless, considering that you’ve done that in the past, a looming question is can I apply for business loans regardless of that? As you might expect, the answer to this question isn’t a fixed one – there are many factors that should be considered, which we’ll outline in the present article.

Bankruptcy Can Be a Fresh Start

Irrespective of the negative connotations associated with bankruptcy, you should note that this isn’t the end of the road – or at least it shouldn’t be this way. Even though it isn’t an easy thing to do, the most challenging process follows after filing for bankruptcy. This refers to aiming at rebuilding your finances and credit.

Generally speaking, a bankruptcy statement will remain on your credit for a few years’ time. Therefore, if you apply for business loans afterward, your capability of getting financing won’t be affected in any way. On the other side, if the bankruptcy statement still is still present on your credit report, which will, inevitably, impair your creditworthiness and reliability as a borrower.

Can I Apply for a business loan despite bankruptcy?

Yes. But bear in mind that your options will be limited. Generally speaking, the longer you wait after you have filed for bankruptcy, the more likely you are to get convenient loan terms and interest rates. At the same time, there are some lenders that are more open to working with you, as opposed to traditional banks whose lending criteria are rather stringent.

Nevertheless, the downside is that the interest rates and additional fees will be significantly higher than they normally should. Therefore, before you apply for business loans, make sure that you can afford to make repayments. If you can’t, this will imminently worsen your financial situation. Evidently, applying for a loan when you’re struggling financially is a decision that requires a lot of consideration and in-depth thought.

The Differences Between Personal and Business Bankruptcy

Considering that you own a business which has established credit, you might have the option of applying for business loans. In this scenario, your firm’s credit rating will be taken into account. In other words, your personal bankruptcy file won’t affect your ability to get business loans in any way.

Your personal credit score is a major constituent for most lenders. That is to say, your credit rating and personal finances are of major significance, even though this is to your disadvantage. Hence, depending on the state of your finances, you might be unable to get financing. Or, your only option could be getting business loans with unfavourable terms and interest rates.

What Steps Can You Take?

Separate Business and Personal Finances

Before anything else, you should strive to distinguish between your personal and business finances. The thing is that, if your business is new, this might not be a possibility. But, if you’re an established business owner, you should definitely separate your personal finances from your firm’s finances. Otherwise, you are inevitably taking unnecessary risks.

Apply for Secured Business Loans

If you really need a form of financing, your only option could be using your valuable assets as collateral for new loans. By adding collateral, you are instantly minimising the lender’s risk when they borrow you the money. This could increase the likelihood of having your application approved.

Be Patient

If you need a business loan despite bankruptcy, avoid requesting a $500,000 loan immediately afterwards. On the contrary, take up smaller amounts of money instead, and focus on making the repayments – this will allow you to rebuild your credit and prove that you’re trying to get back on your feet.

Explain The Circumstances of Your Bankruptcy

Talking openly about the circumstances that led to your current financial situation can be helpful when you apply for a business loan despite bankruptcy. There are situations in which unexpected circumstances can cause unwanted complications. We’re referring to health problems, divorces, or natural disasters – these could seriously mess up your financial life without any fault of your own. Therefore, by being upfront and transparent, you can increase your chances of getting financing for your business.

At the end of the day, it is mandatory to comprehend that each lender has different criteria that ought to be taken into account. Do your research beforehand, so that you don’t end up sending numerous applications all around without any results. Australian Lending Centre can help you – make sure you visit our website to find out more about our loan offers.

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Debt Consolidation Debt Management

Is Debt Consolidation better than Bankruptcy?

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When you have a lot of debts with different interest rates, the first thing you will think of is debt consolidation. However, there are certain situations when debt consolidation doesn’t make the cut and other options seem more feasible. Is bankruptcy one of them?

We will compare two financial services – debt consolidation and bankruptcy – and we will see which one is better for your situation. Note that before you make any request for these types of financial services, you will need to contact an expert to get an idea of what to expect. He/she will also tell you if it is a good idea.

Debt Consolidation

Debt consolidation is a great tool you can use to save money and leave your credit rating unaffected. Debt consolidation will take all your debt payments and transform them into one payment. The idea behind this method is to make the monthly payment and the interest rate lower. You can consolidate your debts through a secured or an unsecured loan. This service requires a certain fee but in the end, you might save more money than before, and you will regain control over your finances.

Here are the pros of Debt Consolidation:

  • Your credit rating and reputation are protected. Your credit score won’t be affected, and you won’t be bankrupt, meaning that your financial status won’t be made public. Bankruptcy records are easy to find and view, and this kind of reputation can affect your future financial endeavours.
  • You can simplify your debts. This means that you will focus on one payment with one interest rate, but you will also get to pay every debt in one go. In other words, you will no longer have to worry about missing a payment or paying it later than usual and suffering the penalties.
  • Debt consolidation will also let you keep your credit cards, unlike other services.

Cons of Debt Consolidation:

While debt consolidation is an excellent method of regaining control over your debts and economy, you could end up paying more in hidden fees, and you might even lose the property. Here are some things to consider:

  • Hidden costs: Here is a thing that many people don’t take into consideration – the loan term. When you apply for debt consolidation, you will pay less every month and have a lower interest rate, but the loan term will be increased. If you stay in debt for an extended period, you may end up losing more money in the long run.
  • Losing property: If you default on your loan, you can lose your car or even your house. Depending on the agreement you signed with your lender, if you default on your consolidation loan, you might end up losing a lot more than just money.

Bankruptcy

Though bankruptcy sounds scary, it isn’t the end of the world. You can eliminate certain debts when filing for bankruptcy. Here are a couple of things to consider when filing for bankruptcy:

  • When you file for bankruptcy, the creditors cannot harass you or take legal action against you. That means that you also are protected against foreclosures or repossessions.
  • Back to square one: Bankruptcy will eliminate most of your debts, and you can get a fresh start. Depending on your financial situation, you can even keep your car and home and pay them at a reduced rate.

The Negative Part about Bankruptcy

Like any other financial service, bankruptcy has its negative factors that you need to consider before applying for it. Here are a couple of things you should check:

  • Credit rating: Your credit rating will be lowered depending on the type of bankruptcy you apply for and your situation. Your credit report will show the bankruptcy anywhere from seven to ten years. Of course, you may already have bad credit seeing that you owe a lot of money and you are bankrupt because of it.
  • You can have a fresh start once you receive your bankruptcy discharge, but until then, you will have a hard time with lenders and other financial institutions.
  • Your reputation: Bankruptcy can be easily discovered by your employer or people who are associated with you, business-wise.
  • Financial sacrifices: You will have to sell your possessions if you want to be eligible for bankruptcy.

In the End

So, is debt consolidation better than bankruptcy? It really depends on your situation and what you want to achieve.  If you want to learn more about the benefits of debt consolidation call us on 1300 138 188 or visit the Australian Lending Centre for expert advice.

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Personal Loans

Things to Consider When Getting Personal Loans for Bankrupts

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Our Trained Professionals Will Help You

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.

Your eligibility

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?

Loan amount

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.

loan-amount

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!

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Debt Consolidation Debt Management

The Importance of Avoiding Bankruptcy

Debt Consolidation

Bankruptcy is that particular legal status of a person, a company or other entity that can no longer repay his or its debts to creditors. Even though some people may affirm that bankruptcy also has a few advantages, the list of disadvantages is definitely much longer. For this reason, you should think of bankruptcy only as an ultimate last resort, after you have used any other alternatives. Learn the importance of avoiding bankruptcy below.

Main Disadvantages of Bankruptcy

No matter if it belongs to a person or business, this status triggers a wide range of disadvantages, which will have a major negative impact on someone’s reputations. Furthermore, there are also practical drawbacks that will be experienced for sure by the person in this situation. Some of them are immediate while others will come around later.

First of all, you should be aware of the fact that you will lose most of your proprieties that are valuable. You will be allowed to keep only the assets you need for a basic standard of living. Anything you own and have a high value will be sold in order to pay the money to your creditors.

Another aspect you should consider before declaring bankruptcy is that you will encounter plenty of difficulties when trying to access credit. There is a specific limit of the credit you are able to obtain, but your chances are significantly lowered by your status, as there are only a few banks which take the risk to borrow money to a bankrupt individual. You may think that soon after getting rid of the bankruptcy, this problem will end. In fact, this issue will haunt you for seven years as the bankruptcy record has to be added to your credit report and remain there throughout this period. Also, according to the policy of some banks or finance companies, your access to your credit cards can be banned.

Moreover, there is a permanent record regarding this aspect that may be accessed by anyone who pays a small fee. They will be provided with an electronic index of these records, also referred to as the National Personal Insolvency Index.

When it comes to reasons why you should be avoiding bankruptcy, another important aspect is that this status will lower your chances of getting employed. In fact, even if you would convince an employer, there are particular industries with strict rules regarding this aspect, and they need to obey them and not hire you.

Less Extreme Alternatives to Bankruptcy

A convenient alternative is a debt agreement. This option is available for those who have not filed a bankruptcy form and consists of a debt settlement arrangement between you and your creditors. This will allow you to settle affordable debts, for example by freezing the interest rate.

Another less extreme alternative is a consolidation loan, which will help you manage your current debts much easier.

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Debt Consolidation

Is Debt Consolidation Still a Viable Solution?

debt consolidation

Unfortunately for us, over the last few decades, we’ve been raking in a lot of debt. As we all know, the global economy has not been the best these past few years, and that has left people in uncertain financial situations, including multiple debts. Debt consolidation was offered as a solution and for a long time, it was one of the most sought after loans. Today, however, there are several alternatives to debt consolidation, so is it still the best option?

Informal agreement

A first option that comes as an alternative to debt consolidation is to make an informal agreement with the companies or institutions you owe money to. More often than not, your creditors will be willing to provide assistance in reworking the way you are paying your debt. Remember that it is in their best interest to work with you, and not against you. If you let them know that you are struggling, they may be able to help you by working out a deal.

Mortgage refinancing

There is an option that is very much alike debt consolidation and that is mortgage refinancing. This allows you to refinance your house and consolidate all of your repayments into a single one that may very well end up being lower than the one you had before. This is a good idea even if you are not in debt, but if you are having trouble repaying your mortgage.

Debt agreement

Now, a debt agreement is very much like an informal agreement, except that it’s formal, in that it is legally binding. In theory, this is the better option, since it does offer you some protection that is missing in an informal agreement. The catch is that not everyone is eligible for this kind of option, and not all creditors will be willing to create such an agreement with all their borrowers. Remember that there are also consequences you need to be aware of.

Personal insolvency agreement

A solution that may be extreme, but is actually a good option aside from debt consolidation is to create a personal insolvency agreement. You see, this choice provides you with more control than you would think and it offers you the chance to strike a compromise. This option comes with certain requirements and consequences. Of course, an even more extreme solution is to declare bankruptcy, which effectively eliminates your debt, but your assets will be seized. It will also appear on your credit history for 7 years.

All in all, there are many options you might consider if you find yourself in the situation of having multiple loans that you are struggling to pay off. They have advantages and disadvantages, and you may choose between them according to your personal financial situation. However, debt consolidation remains one of the most popular and most effective solutions, because of how convenient it is from all points of view.

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Debt Consolidation

Should I Consider Debt Consolidation?

debt consolidation

Consider Debt Consolidation?

A lot of consumers are confused about debt consolidation. Most assume that debt consolidation is only necessary when you’re living pay cheque to pay cheque or you’re facing bankruptcy. The fact of the matter is that anyone can benefit from debt consolidation and they don’t have to be underwater to do so. In fact, taking advantage of debt consolidation before your bills get out of hand can actually prevent further damage to your credit file.

What is Debt Consolidation?

Debt consolidation combines multiple loans and credit cards into a single loan and payment. You do so by applying for a new loan through a debt consolidation specialist and using that loan to pay off your current debts. Then, you repay the single loan to the lender.

Not all debts can be consolidated. Debt consolidation loans are meant for credit cards, some medical expenses, store credit cards and personal loans. Your home loan or business loan cannot be placed into debt consolidation.

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Debt Management

What is the Impact of Becoming Bankrupt?

effects of bankruptcy

Bankruptcy does not last forever. Usually, its protection lasts only a year. During the period, the individual’s financial affairs will be put under restriction. That means there are certain privileges that the bankrupt person may not possibly enjoy even after bankruptcy has been lifted. Discover the impact of bankruptcy here in this article.

Furthermore, being bankrupt is not a guarantee that a person will be totally free from any financial obligation. In many cases, the individual is still required to pay a certain amount to repay debts from creditors following an assessment of current inflow and outflow of income. The repayment scheme under bankruptcy may continue even after the individual is discharged from the provision.

Needless to say, bankruptcy brings about serious implications. Its impact can never be underestimated and overlooked. Aside from the embarrassment and eroded self-esteem, an individual can face the greatest setback in his financial aspect.

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News

Controversy over Bankruptcy Threshold

Bankruptcy Threshold

The banks don’t want the government to go ahead with their plans to raise the bankruptcy threshold from $2,000 to $10,000. The Australian Bankers Association claims that by raising it to $10,000 it will encourage Australians to run up bad debts.

What this change will mean is that companies that debtors owe money to will not be able to ‘chase’ their payments from the debtor until they have accumulated at least $10,000 of debt.

The proposed new law also would increase the “stay period” from 7 to 28 days, which would force creditors to wait a month before being able to take action to recover the debts owed to them.

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