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Can I Ever Get Credit After Bankruptcy?

Can I Get Loans or Credit After Bankruptcy
Can I Get Credit After Bankruptcy

New loans and credit cards may present less of a challenge than you’d think after bankruptcy.

But there’s a lot to think about before bankruptcy filers drag themselves down with new loans.  Bankruptcy, in the right circumstances, cleans the slate for a new financial life.

The U.S. Supreme Court explained it in these words:

“It gives to the honest but unfortunate debtor … a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.”

The case of Local Loan Co. v. Hunt clarifies the idea that bankruptcy gives honest debtors a fresh start.

Secured Loans After Bankruptcy

What kind of loan do you want?  If you need a new vehicle, car loans are generally available after and even during bankruptcy.  This is because these are secured loans.  Secured loans tie possession of the vehicle to payment.  If there’s no payment, the car can be repossessed.

Mortgages are also secured loans with the obvious threat of foreclosure if payments are missed.  Usually there will be a mortgage company out there willing to loan money to buy a house.  The issue after bankruptcy is that the interest rate will be higher than the person without bankruptcy on record.

The fact remains though that secured loans are usually easier to get than unsecured loans.

Credit Cards After Bankruptcy

Crazy as it sounds credit card companies often send invitations to bankruptcy filers within months after discharge.  They know bankruptcy filers largely ended up in bankruptcy because they liked and potentially lived on credit.  They know many filers want back on the credit highway.

Credit card companies also know that a second chapter 7 can’t be filed for 8 years.  So, their collection agents and attorneys can hound you with collection actions for the next 8 years.

Caution in Considering Credit

Never even consider a credit card without reading the application, especially the small print.  Take a look at what else is available.  Compare what they want to nail you with in interest rates, fees and other charges.

Car loans, credit cards and even mortgages should not be a big deal to obtain.  The important thing is to get the right loan which you know you can pay regularly and early.  Having filed bankruptcy your interest rate may be higher on secured loans.  But be careful before jumping head first into credit cards again.

Here’s an article on the related topic of rebuilding credit after bankruptcy.

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Attorney Myers is a member of the American Trial Lawyers Association, Massachusetts Academy of Trial Lawyers, and New Hampshire Trial Lawyers Association. The Law Offices of Andrew D. Myers offer a broad range of legal services in personal injury cases in Massachusetts (MA) and New Hampshire (NH) areas.

The information on this web site is offered for informational purposes only. It is not offered as, and does not constitute, legal advice. Laws vary widely from state to state. You should rely only on the advice given to you during a personal consultation by a local attorney who is thoroughly familiar with state laws and the area of practice in which your concern lies. This web site must be labeled advertisement in some jurisdictions.