Most people, if not all, are afraid to declare and file bankruptcy because of their belief that they could never be qualified for post-bankruptcy loans or that they would have to what a decade to be able to qualify or avail of such. Those who had filed for bankruptcy who availed of bankruptcy loans after being discharge testify that neither of the foregoing cases were true. At most cases, debtors, or those who had filed bankruptcy, receive most number of credit card offerings than their pre-bankruptcy state and they are deemed as far safer credit risk by most credit-issuing institutions.
The US Bankruptcy Code provides not only he procedure on how bankruptcy cases are handled but also the prescribed period to which a debtor could avail of bankruptcy loans. A person who had filed for bankruptcy under the Chapter 7 must wait for 2 years proceeding the date of the bankruptcy filing period and immediately after the case had been dismissed. Those debtors filing for bankruptcy under the Chapter 13, on the other hand, must be able to pay all his or her obligations from all listed creditors after being permitted to avail of another credit.
Though the period to which a debtor may avail of credit after filing bankruptcy applies to all, banks and lending institutions are deemed more flexible and accommodating these days. Personal bankruptcy due to medical expenses has a higher chance of being awarded of bankruptcy loans than of a case due to cases of inability of handling resources such as a result of shopping expenses. A person’s present circumstances which show improvement in one’s financial capability are deemed the best way to show one’s credit worthiness for a new credit.
Bankruptcy loans availed, on the other hand, by businesses undergo more difficult evaluation than debtors under personal bankruptcy cases. The type of industry a business is categorized in up to how long the business had been operational all adds up and affect the outcome of a lending institution’s decision whether or not a fresh capital in the form of a bankruptcy loan will be provided for. Businesses that are in the auto-industry and those that are in post-start-up period would experience difficulty in being approved for bankruptcy loans than those that are engaged in pre-owned retailing and relatively mature businesses. However, most evaluation of credit worthiness for businesses vary and, thus, depends on the lending institutions’ evaluation criteria. Businesses are advised to draft business loans as if they are applying for a capital, and not just a fresh infusion of it. The business plans need to provide lending institutions the primary reason why the business had reached bankruptcy and the measures to be taken by the business owner to prevent any unforeseen event that may lead to another bankruptcy. The business owner should be able to sell the idea of measures to prevent bankruptcy as if he is trying to sell a business idea. Answers to questions such as the capacity of the business to ensure a steady stream of revenue and a strong customer base supported by ample hard business data from demographics to past business experience must be provided in order to justify why business deserves a bankruptcy loan. Businesses prior to filing bankruptcy loans application are advised to undergo trainings and information such as those provided by local Small Business Development Center and the American Bankruptcy Institute in order to equip them with rules and regulations and other pertinent information affecting their cases.