Can I Get A Payday Loan After Bankruptcy

Can I Get A Payday Loan After Bankruptcy?

A payday loan online following bankruptcy – is this even possible? In short, yes. However, it is important to keep in mind that doing so will take both time and effort seeing as a bankruptcy negatively affects your credit rating for years to come. However, more challenging than even obtaining a payday loan online is finding a potential lender that doesn’t charge exaggerated interest rates with difficult terms.

If you’re looking to help increase your credit score through a payday loan online and using such to make your payments on time and in full after filing for bankruptcy, then planning, preparing and organizing for a a post-bankruptcy loan accordingly is of extreme importance in order to increase your chances of acceptance.

Getting A Payday Loan After Bankruptcy!

A Federal Reserve study concluded that, “Ninety percent of individuals have access to some sort of credit within the 18 months after filing for bankruptcy, and 75% are given unsecured credit” which demonstrates that genuinely obtaining a loan following bankruptcy is in fact less challenging than expected. More so, approximately 20% of the studied group successfully accessed a loan after bankruptcy. This is most likely due to the reasoning that once a borrower’s debts have been erased, their debt-to-income ratio will have improved, which is one of the main factors that a potential lender looks at when assessing risk.

Types of Consumer Bankruptcy

Consumer bankruptcy comes in two forms: Chapter 7 and Chapter 13. Both have different impacts and effects on your credit rating as well as on your chances of post-bankruptcy loan approval.

Chapter 7 Bankruptcy

First off, what is Chapter 7 bankruptcy? Here, you’re obliged to sell certain of your assets in order to pay back eligible outstanding debts. Generally speaking, a Chapter 7 bankruptcy provides more of a “clean slate” than does Chapter 13. However, according to myfico.com, Chapter 7 can remain on your credit score for up to ten years or even longer.

Following discharge from Chapter 7 bankruptcy, it may be more difficult to obtain a loan than with Chapter 13. This happens for a couple reasons. Because you don’t have to deal with a repayment plan, your file may appear less favorable to a potential lender.

Keep in mind that after bankruptcy, there’s no need to wait the complete ten years before improving your credit score. You can help decrease the impact of your Chapter 7 bankruptcy by incorporating good credit habits right away and holding on to them as your bankruptcy moves further into the past. The sooner your start building and improving your credit rating, the better your chances at obtaining a post-bankruptcy loan.

Chapter 13 Bankruptcy

We’ve looked at Chapter 7 bankruptcy, which erases all eligible debts, however, a Chapter 13 bankruptcy demands for a reorganization of both debts and income.

Through the court system, a 3-5 year repayment plan will be implemented in which you will have to make monthly payments to a trustee who then distributes the latter to the creditors who have filed a claim against you. Contrasting Chapter 7 bankruptcy, Chapter 13 doesn’t oblige the person to sell any of their goods or personal property in order to pay the debt off. In most scenarios, a person will primarily choose Chapter 7 bankruptcy initially but will opt for Chapter 13 if they don’t meet the eligibility requirements for the former.

Although initially, Chapter 13 bankruptcy looks a little more difficult to deal with – notably due to the monthly payments – it actually has a plus side. Chapter 13 bankruptcy doesn’t remain on your credit record as long as does Chapter 7 bankruptcy. More so, Chapter 13 bankruptcy doesn’t affect your credit for an entire 7 years. Establishing positive payment history and hence increasing your credit score becomes possible if you succeed in obtaining a loan during your bankruptcy repayment period.

When to Apply for Payday Loans after Bankruptcy

You can start looking at a loan immediately after your bankruptcy discharge – even though bankruptcy may remain on your credit report for the full ten years. Certain potential lenders are more open and willing to work with individuals who have this file type. Chapter 7 bankruptcy means that all your debts are paid back, you don’t have regular payments to keep up with, however the bankruptcy still remains in your history for an entire decade. Derogatory credit history including bankruptcy filing though influences your credit score every passing year.

For Chapter 13 bankruptcy though, repaying some or all of your debts is mandatory, usually over a 5-year period, sometimes 3. This form of bankruptcy is generally considered less damaging to your credit report and is displayed in your credit history for 7 years. While still paying your Chapter 13 bankruptcy, you have full rights to apply for a payday loan.

How to Prepare Your Loan Application

Are you interested in obtaining a payday loan online after bankruptcy, then you need to present yourself and your situation in the best possible light.

Obtain a Copy of your Credit File

Equifax, Experian, and TransUnion are the three credit bureaus of which you can obtain a free copy of your credit report once every year. Once in hand, make sure you’re verifying that all information is exact and up-to-date, equally make sure that your file is void of mistakes. For example, in the case of Chapter 7 bankruptcy, make sure that all your eligible debts were included and that such now display a zero balance. In the case of Chapter 13 bankruptcy, it is important to verify that all your payments are being applied in the right places.

Don’t hesitate to file a dispute if any mistakes appear on your credit report. Such can be corrected or completely removed if necessary, improving your credit score as a whole.

Verify that your Income is Correct

In many cases, providing proof of stable and sufficient income can greatly increase your chances of obtaining a loan, especially since credit score and history are only 2 of many factors that are taken into consideration when applying for a payday loan online.

Keep in mind that reportable income is based on actual and current income and therefore, if you’ve recently been given a raise, this should be included in your calculation. If you have access to any other forms of income, such as a spouse’s income or a salary you’re earning from a side business, then make sure you’re including this too. You can head over to your appointment with all the needed proof in hand: pay stubs, bank statements, a W-2, and tax returns.

Don’t Hesitate to Fight for your Case

Even if you application receives a refusal right away – don’t lose hope just yet. You can fight for your case. Explain what led you to declare bankruptcy in the first place and place an emphasis on your commitment to building and maintaining strong credit abilities. Although this doesn’t guarantee that the refusal will be overturned, it does however increase the chances of such.