Many people who file Chapter 13 bankruptcy fear they will not be able to successfully apply for a loan, or that they will only find lenders that require such high fees that it is not feasible to apply for financing. So when bankruptcy filers find a Tennessee lender who is not interested in their past credit history, it seems like they have found the answer to their problems. However, a lender who does not ask you about your past debt history may actually be bad news.

Reputable financial lenders want to examine a person’s previous credit history to determine if that person has a good chance to repay that debt. Nerdwallet warns that a lender who is not interested in your history of paying debts might be a predatory lender. Predatory lenders are malicious actors who know that there are people out there trying to recover from bankruptcy and will offer enticing deals to draw people in.

Predatory lenders may make offers that include some or any of the following:

  • A pledge to mend bad credit
  • Offering inexpensive loans in spite of any bad credit history
  • Settling debts for less than the debts are worth
  • A refusal to check your credit history

However, these offers will usually prove to be false or misleading. What predatory lenders want to accomplish is to get a borrower to sign on to a deal that includes high rates of loan repayment, more than any reputable lender would require. Such rates can cause a bankruptcy filer to go deeper into debt and make it even harder to rebuild good credit. Also, a lender may try to get access to a borrower’s assets, including a borrower’s bank account.

According to Bankrate.com, a bankruptcy filer should watch for lenders that charge above 2 to 3 percent over the usual lending rates. Additionally, people who have filed for bankruptcy are advised to check with the Better Business Bureau to see if a prospective lender has a good reputation. Also, a bankruptcy filer should be on the lookout for legitimate assistance offered to people who have gone through bankruptcy, such as mortgage lenders that allow a person to refinance their mortgage loan after establishing good credit.