One of the most well-known consequences of filing for bankruptcy is the mark on a credit report. Texas individuals may worry about access to credit following a bankruptcy filing, as a lower credit score can impact the ability to qualify for a loan. However, while getting a personal loan may be more challenging following Chapter 13 or Chapter 7 bankruptcy, it is not impossible.
While a bankruptcy filing can lower a credit score from 130 to 240 points, there is an upside. Chapter 13 and Chapter 7 bankruptcy will also lower a person’s debt-to-income ratio, which can boost a credit score over the long-term. It also offers a fresh start financially for those who are struggling with debt, and those who manage finances properly after filing may see an uptick in their credit score in a matter of years.
It is a good idea for those who have filed for bankruptcy to keep an eye on their credit score and have an updated credit report on hand when seeking a loan. Speaking to multiple lenders and offering details about one’s bankruptcy and financial behaviour since then can also help. Shopping around can also help people find a fair interest rate.
Some lenders may try to prey upon those with bad credit by offering personal loans with interest rates as high as 299 percent to those with bad credit. Those who have filed for Chapter 7 bankruptcy should not feel that this is their only option for credit and should instead shop around for a fair lender or consider a secured personal loan. Those who are looking for information on filing for bankruptcy in Texas should work with an attorney in the area with expertise in these matters.