Small Business Loans After A Chapter 13 Bankruptcy
Being bankrupt is a legally declared inability of an individual or organization to pay its creditors
. Legal action is taken on such a person or company in a bankruptcy court. Once declared bankrupt, you can then be compelled to use your assets to pay your debts. However, if the condition does not improve you can be freed from the responsibility of your debts after one year or before. There are two types of bankruptcy; that is voluntary and involuntary. Chapter 13 of the bankruptcy code allows you to retain your assets but requires you to give a plan of how you intend to pay off your outstanding debts within a given time from your income.It is possible to get a business loan after facing bankruptcy. Most of the records of your earlier financial problems will be readily available to creditors for up to ten years. You can still sway them to giving you credit again. This is done by ensuring that, you pay for all your bills on time in future. Creditors will then begin to forget your earlier problems. You do this by taking credit and paying on time to increase your credit score. When financial institutions see this, then you will be able to apply and get a business loan.
In addition, you need to check if the information on your credit report is accurate and up to date. When this is not done, it could still be showing that you are bankrupt. This will easily disqualify you as a possible candidate for another loan. People will tend to believe the information on the report more than they will what you tell them. You will also need to prove that you have learnt from previous mistakes. These mistakes include, overspending, carelessness or extravagance.
Before you approach any financial institution for possible lending, you need to inform the court of your intentions. The court will need to know how much you intend to borrow, for what purpose the money is intended, the payment period you will been granted and the interest rates involved. If the court finds the loan to be within what it considers reasonable, then it will permit you to proceed and apply for your loan. The court can however reject your application if it feels that taking the loan will prevent you from making payments to your previous creditors.
Small Business Loans After A Chapter 13 Bankruptcy
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