Just because you file for bankruptcy does not mean that your life is over. There is hope for rebuilding your credit and getting back into a secure, fruitful financial position. Remember, you didn’t get into financial trouble overnight, and the problem won’t go away instantly, either. Commit to making sound financial decisions from here on out, and begin to establish better ways to manage your money. Wait six months to one year after your bankruptcy discharge before you seek a personal loan that will help rebuild your credit.

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Get Your Credit Reports

There are three major credit bureaus that keep track of reports submitted by creditors on their debtors. Start your quest for a loan by requesting your credit report from each of these companies. Go over it thoroughly. If there is any false or incorrect information on the report, follow the company’s procedures for contesting it. These companies have a reputation for accuracy, and will usually work with you to make sure your report is correct. Once you are aware of your credit score, you can begin to work towards getting a personal loan.

What is Your Current Debt?

If you have not yet filed chapter 13 bk, now may be the time. If your current debt is too high, there is no way to get a personal loan. However, if you have erased your debt through bankruptcy, you have a clean slate to start from. This is an important rebuilding time, so make sure you only take out lines of credit you can repay. Use the money for things of value, such as home improvements and capital investments. Avoid using credit for weekend shopping trips, vacations and other frivolous things.

High Interest Versus Collateral

When you apply for a personal loan following bankruptcy, you’ll likely face one of two things: the lender will either charge a high interest rate or demand that you put up collateral to cover the loan. Make sure that you will be able to make the monthly payments and that the loan is worth what it costs in terms of interest. Remember, any property or money you put up as collateral for a loan will be lost in the event that you don’t pay back the loan.

The Bottom Line

It is possible to get personal loans after a discharge from bankruptcy, but you’re on a different playing field than you were before. As soon as you reestablish your ability and willingness to repay your debts, your credit scores will go up and your ability to obtain credit in the future gets much better.