Declaring bankruptcy isn’t a decision anyone would ever take lightly. Anything that can be done to prevent bankruptcy occurring is usually a wise course of action, though there are instances where bankruptcy simply cannot be avoided.
Those affected by bankruptcy often have questions regarding bankruptcy loans, bankruptcy mortgage applications and general bankruptcy finance – both immediate and long-term.
Loans for people after bankruptcy do exist but are not necessarily the same as those for borrowers with a clean credit history.
What is Bankruptcy?
Knowing how to avoid bankruptcy in the first place begins with understanding the concept of bankruptcy and its implications. Bankruptcy occurs when an individual cannot afford to repay their debts within a reasonable time period, due to having insufficient income and on-hand assets to cover what they owe.
Before being able to declare yourself bankrupt, your creditors will have the opportunity to seek possession of almost everything you own to sell and raise funds to cover your debts. This may include your car, your home and your general possessions, though there are restrictions to ensure those affected are not rendered homeless or unemployed.
If your application for bankruptcy is successful, all debt repayments are frozen and monthly repayments are halted (unless you are declared able to continue paying a reduced amount). Most bankruptcies are ‘discharged’ after the first year, meaning that the debts are effectively written off. This may be extended to three years if it is determined that you can and should continue making payments for such a period of time.
Loans for People Who Have Filed Bankruptcy
Anyone who files bankruptcy is legally obliged to disclose this information when applying for a financial product to the value of £500 or more. In doing so, you are almost guaranteed to be turned down by the vast majority of major banks and lenders.
This does not mean that loans with bankruptcy are not readily available – it simply means you need to target the appropriate lenders with your applications.
Bankruptcy mortgage loans, personal loans with bankruptcy and various types of secured loans can still be granted where extreme credit issues apply. Short-term financial solutions like bridging loans are also available, which can be useful for clearing debts, meeting urgent outgoings or funding major purchases (like cars or homes).
In most instances, loans during bankruptcy are issued on the basis of security (aka collateral) on the part of the applicant. Assuming your home is not repossessed as part of the bankruptcy process, you may still be able to borrow money to the value of the equity you have tied up in your home.
Secured loans, bridging loans and remortgage loans could help you raise money for almost any purpose, with the added incentive of a comparatively low rate of interest.
Personal loans issued on the basis of strong credit are more difficult to access, though again may not be out of the question entirely.
How to Get a Loan or Mortgage After Bankruptcy
The key to getting any kind of loan or mortgage after bankruptcy lies in seeking qualified expert support at the earliest possible stage. Rather than taking your business directly to any specific lender, it is far better to consult with an independent broker.
In doing so, you will access the impartial and objective advice you need to choose an appropriate way forward. In addition, your broker will be able to compare bankruptcy mortgage loans (and other types of loans) on your behalf from an extensive panel of specialist lenders. Many of which are not on the UK High Street, instead operating exclusively through approved brokers.
Even if you have been turned down repeatedly elsewhere, there is every possibility a reputable broker will help you find a competitive loan at a price you can afford. Importantly, exploring the available options with the help of a qualified broker can also protect your credit file from further damage, should any of your applications be unsuccessful.
If looking for help applying for a loan after bankruptcy or simply interested in the available options, we are standing by to take your call. Contact a member of the team at UK Bridging Loans anytime for an obligation-free initial consultation.