The Pros and Cons of a Bankruptcy Loan
The pros and cons of a bankruptcy loan are something you should carefully consider. You need to look carefully at getting financing no matter what your situation is really, but your particular financial history makes everything a bit more complicated and requires more scrutiny. When done carefully and built into part of your plan for your financial life, financing can be another step on the way to a brighter financial future.
Starting off with the reasons for doing this, the first and most obvious pro is that you'll get financing. If you need to get a car or you want to go to school or anything else that you'll need some financing for, this is a pretty big deal. Of course this won't be easy with your history, but that's for the cons list. The other big positive, that will have a bigger impact on your finances, is that it will help improve your credit over time. A bankruptcy loan is the perfect opportunity for you to build up a positive payment history. After you discharge your debts your only real focus for financial repair is to build up new financial history. You need accounts with positive payment histories that will help raise your rating and show you can be trusted to make payments on time. This financing deal is a great opportunity to build up that history.
The downsides to doing this are more obvious, and what people will be more likely to start telling you right off the bat. The first con, is of course, that it will be difficult to get approval for an after bankruptcy loan. It's difficult to get approval when you have any kind of black marks on your credit report, but in this case, you have the biggest black mark you can possibly have. Lenders decide who to lend to based on the level of risk they represent. Now, you can lower that level of risk for the lender by offering up some kind of collateral and getting secured financing. This has it's own pro and con list. The downside is that you're risking losing this collateral if you don't make your payments, however, as long as you make your payments everything will be fine there. The other downside is that it's slightly inconvenient having to get your collateral appraised and go through the secured financing processor. However, for doing this, you'll have the upside of making it much easier to get approval.
Another small downside to getting a bankruptcy loan is that for the immediate future it will lower your credit score. While this is something to consider, in your situation, your score has already taken such a beating that this isn't too serious of a concern, especially if you're not going to be applying for anything in the immediate future where your score will be looked at. Also, remember from the pros list, that even though you're going to be taking this dip in the short term, over the long term your score should rise as long as you're making your payments on time and building up this new positive payment history.
With all of these pros and cons it's easy to see that the real issue when getting a bankruptcy loan is to know what you're getting into and have a plan made out for your finances. If you have a budget and proceed carefully everything you do is just another step towards a better credit score.