Your financial circumstances made it necessary to seek bankruptcy protection. Now the case is settled and the court has released you from any further obligations, you may wonder if any lender will work with you.
In fact, there are lenders willing to extend bankruptcy loans in Canada to qualified applicants. If you are interested in exploring your options for bankruptcy loans in Canada, here are some essentials that you should know.
What the Bankruptcy Taught You Makes a Difference
As part of the requirements for receiving bankruptcy protection, it was necessary to successfully complete a court-ordered course on financial management.
The skills you learned in that course were designed to help you become more fiscally responsible. Assuming you’ve put those skills to good use, lenders who offer bankruptcy loans will be interested in talking with you.
That’s because those lenders want to be sure that any loan or loans you receive will be repaid in a timely manner. The fact that you’ve done a good job managing your finances since filing for bankruptcy stands you in good stead.
Your compliance with the court’s requirements also indicates that you have every intention of honoring future obligations. This type of commitment will certainly make a difference when you apply for any loans after bankruptcy.
Remember that paying obligations like rent and utilities on time is one more way that you demonstrate the ability to manage your finances responsibly.
Since all or most of your debt was discharged through the bankruptcy, it’s these monthly obligations that provide the chance for you to truly show off your financial skills. Make sure you’re not late with any of them and more lenders will be willing to talk with you.
A Steady Source of Income Will Help Too
As with student loans and any other type of lending situation, lenders want to be sure that there’s the ability to repay the debt according to the loan terms and conditions.
The ability to confirm a steady source of income does enhance the odds of being approved for a personal loan after bankruptcy.
When your income is sufficient to cover essentials like housing, food, utilities, and transportation while still having money left over, the lender tends to view you as posing less of a risk.
Remember that if you have a consumer proposal in place, that will be taken into consideration. This is true even if the proposal has only a few more months until it’s fulfilled.
If you can, delay seeking a loan until the terms of the proposal are completed. Just as you want to avoid credit card debt right now, it pays to free up as much of your income as possible. The lender may reward that effort with a slightly better interest rate.m
No Outstanding Debt? That Helps Too!
Remember that the Bankruptcy and Insolvency Act governs bankruptcy Canada. In some cases, you may still have some outstanding debt after your bankruptcy is discharged.
If that’s the case, some lenders may not be willing to work with you at present. Choosing to not seek a loan until those remaining debts are paid will increase the odds of being approved.
Think of driving your car another year before seeking a loan as a chance to get rid of any lingering debt. During that time, continue to show the diligence in financial matters that you required of yourself during the bankruptcy process.
Your effort will pay off in terms of improving your credit score, providing the lender with more evidence of your ability to manage the household finances responsibly, and may even increase the odds of receiving the loan amount that you are seeking.
Expect the Lender to Look at Your Payment History Prior to the Bankruptcy
While you may think that your payment history prior to the bankruptcy doesn’t matter, it’s not unusual for lenders to see how things were going prior to your decision to seek protection.
If you were current on most of your debt obligations prior to the filing, that is noted. When you had quite a few obligations that were in arrears, it’s natural for an agent at a loan company to wonder if you will repeat the pattern.
Be prepared to answer questions about your history prior to the bankruptcy. Be as detailed and honest as possible. Doing so will make it easier to put that period of your financial history in perspective and could increase the odds of receiving the cash loan you’re seeking.
And The Amount of Time That’s Passed Since the Discharge
How long has it been since your bankruptcy discharge? Lenders are more likely to work with someone who is not seeking a loan soon after successfully fulfilling the terms of bankruptcy.
One plus of waiting is that you do have more time to demonstrate the ability to live within your means. Lenders like the idea of lending money to people who are seriously working to put their financial troubles in the past and make a reasonable effort to avoid repeating the same scenario.
Use this short period to make the most of the disposable income you have each month and began rebuilding your savings.
Having that asset on hand will also make you more attractive to lenders. If you can wait at least six months after the discharge and manage your money well in the interim, more lenders will be interested in doing business with you.
The bottom line is that many people are eligible for bankruptcy loans in Canada.
You may be among that number. Take a good look at your present financial state, including the amount of income that you generate per month.
Along with making it possible for you to buy something that you need, that bankruptcy loan may be one of the more important ways that you begin to repair your credit score and eventually qualify for loans with more favorable terms.