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Get A Fresh Start Through Bankruptcy

Ways to make a good case for yourself to lenders

On Behalf of | Oct 24, 2018 | What Bankruptcy Can Do |

Declaring bankruptcy is not the end of the world. Although it is a common fear among many people that financial lenders will now look at them as major financial risks as a result of bankruptcy, the fact that you have gone bankrupt will not shut the doors of every financial lender to you. You still have ways that you can present a good case for yourself at your local Tennessee bank or lender.

Smartasset explains that your lender is probably going to inquire about your bankruptcy. Naturally, a lender may wonder why you had to declare bankruptcy in the first place. Even if the subject is uncomfortable, you should still prepare to explain the circumstances of your bankruptcy as best you can. You can also expect some questions about how you have handled debt since your bankruptcy.

Additionally, think about how to show that you are establishing new credit in the aftermath of your bankruptcy. Even though your bankruptcy may still be on your credit report, you can mitigate the effects of the bankruptcy through rebuilding your credit. This is why it is a good idea not to rush back to a lender after bankruptcy. Spend some time paying off a credit card or a secured loan to show a lender that you can pay off your debts.

Also remember that bankruptcy liquidates debt. Getting debt off your slate is a major step toward financial solvency. Bankrate explains that lenders look favorably on a strong and steady income, assets in your bank, and a history of regular credit card payments that proves you can pay off debt. Once you are free of debt, you can build up these important credentials that lenders will see as positives in a borrower.

Even if you have to wait a while to approach a lender after bankruptcy, the time you take to build up your slate of positives is well worth it. Bankruptcy will make it more challenging to secure big loans and mortgages, but the opportunity to wipe out your debt and make a fresh start can make it easier to acquire the positive financial factors that lenders want in their clients.