Advice On Getting
A Loan After Bankruptcy
Getting a loan after you've just
gone through bankruptcy is not as hard as you may think. Today's
lending environment is very competitive, and many lenders are willing
to take the risk of loaning to recent bankruptcy filers. You will
likely have to pay a high interest rate for the loan, but successfully
handling credit will help you improve your credit score to the point
where you can refinance to a lower rate.
Contact a reputable bankruptcy
attorney. Suggestions for finding an experienced bankruptcy lawyer
include contacting your local or state bar associations for referrals
or asking friends or co-workers if they know a trustworthy attorney
with bankruptcy experience.
Other Things You
Need To Do To Get A Loan
Take all your financial papers including outstanding
bills, bank statements,paycheck stubs from the most recent six months,
copies of mortgages and car loans and tax returns to your first
meeting with your attorney.
Your bankruptcy paperwork, called a petition, must list every debt
you owe. If you don't list any creditors and the Bankruptcy Court
finds out, it can dismiss your case and your bankruptcy is over.
It is also a federal crime to lie on your bankruptcy paperwork.
Debtors found guilty of lying in their petition can be fined or
even sent to jail.
Discuss your "secured" and "unsecured" debts
with your attorney. Secured debts are those like cars and mortgages
where creditors hold a security interest in the property until the
debt is paid. If the debtor does not pay the debt, the creditor
can reclaim the property. Loans on collateral work the same way.
Unsecured debts are debts not secured by property, such as most
credit cards or medical bills.
Get More Help
And Advice For Obtaining A Loan
Ask your lawyer if any of your debts will
survive your bankruptcy or if they will be discharged, meaning
you won't have to pay them after your bankruptcy is over. Debts
that are extremely difficult to get discharged by bankruptcy include
delinquent taxes, student loans and child support.
Tell your attorney about all the income you earned the last six
months. That includes any bonuses or other one-time payments you
generated. If you don't, and the Bankruptcy Court finds out, your
case will be dismissed and you could be charged with perjury.
The amount of your income will impact the chapter of bankruptcy
you are entitled to file.
Depending on the types and amounts of your debts, determine if
you can and should file a Chapter 7 (also known as a Liquidation
Bankruptcy) or a Chapter 13 (Adjustment of Debts) petition. You
may choose Chapter 13 if you earn a regular income and are behind
on your secured debts, like your house mortgage, because a Chapter
13 is designed to help you catch up on those payments.
When your bankruptcy petition is completed and you have reviewed
it carefully with your lawyer, you will sign the petition in numerous
places, verifying the information is true. After that, your attorney
will file your case electronically, meaning online, with the bankruptcy
court that oversees your district. If you don't have an attorney,
you will have to file your bankruptcy either in person or via
U.S. Mail with the appropriate bankruptcy court.
More Loan Advice
Your creditors will be notified
of your bankruptcy filing since the Bankruptcy Court sends each
one a document called a Notice of Commencement.
One of the major benefits of filing any chapter of bankruptcy
is the "Automatic Stay" that goes into effect as soon
as your petition is filed. An automatic stay means your creditors
have to stop all collection efforts after they are notified of
the bankruptcy filing.
Since it takes some time for the
bankruptcy court to send the Notice of Commencement to your creditors,
if one of them calls you about your debt with them, after you
have filed bankruptcy, simply give them your bankruptcy case number
and date of filing. Doing so gives them notice of the filing and
notice is what makes the automatic stay effective.
However, among the major changes
enacted in the bankruptcy code is that if a debtor had a prior
bankruptcy filing dismissed within too close of a time to your
current filing, you might not get an automatic stay.
When a Chapter 7 bankruptcy is
filed, the bankruptcy system assigns someone called a Trustee
to your case. This person represents the interests of the U.S.
Bankruptcy Court. They have several responsibilties. Among them
is to ensure you, as the debtor, were honest in completing your
bankruptcy petition and signed it with full understanding of what
you were doing. They also collect and sell your assets beyond
what the bankruptcy code allows you to keep and then distributes
monies raised from those sales to your creditors. However, if
the Trustee declares you to have a "no asset" case,
it means you can keep all of your assets and won't have to surrender
anything to the Bankruptcy Court.
Ask your attorney which "exemptions" apply to your case.
Exemptions are allowances to keep some of your assets so you won't
have to surrender every last item you own just because you filed
for bankruptcy. Exemptions differ in every state and some states
don't even have their own exemptions. In those states, the federal
exemptions apply.
After your bankruptcy is filed, you (and your lawyer, if you hired
one) will have to attend a Meeting of Creditors. Assuming that
your court hearing goes smoothly and you comply with additional
bankruptcy rules as they arise throughout your case, a Bankruptcy
Judge will issue you a discharge.
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