Filing bankruptcy can leave you in a miserable condition. Apart from the social and economic stigma, you would also have a ruined credit score if you opt for this debt relief option. For obvious reasons, post-bankruptcy life is not very easy for most people. It becomes quite difficult for people to secure loans in case they want to buy some assets which they have lost in bankruptcy. Under the circumstance, many lenders try to take advantage of the situation such a person is in. Here are a few ways the debtors can try to bully people with a history of bankruptcy:
- Most people try to open new lines of credit in order to build their credit after bankruptcy. The lenders take this opportunity to charge extremely high interest rates on the credit cards. This pushes the people into debt instead of building their damaged credit. Do not let this happen to you. Don’t fall for just any card which you come across. Either you should take time to find a credit card with a reasonable interest rate or you should opt for a secured credit card with a low rate of interest.
- Mortgage lenders are another threat in the post bankruptcy period. It is understandable that you might want to purchase a house after bankruptcy to replace the lost assets. In this case, most mortgage lenders will be happy to force you into subprime mortgage. This type of mortgage has extremely high interest rate and questionable terms and conditions. If you are determined to buy a house then consider FHA mortgage which has a very low interest rate of 3.5%. However, to qualify FHA mortgage you would need a FICO credit score of at least 640 and a two year gap from the bankruptcy filing. If you are not eligible for FHA mortgage then take your time to find a fair deal.
- Some unscrupulous car loan companies often become a headache for people planning to purchase a vehicle after bankruptcy. A car is an important asset which a lot of people can’t do without. Taking advantage of this situation, many car loan companies compel people to sign agreements which weigh on them heavily.
It would take some time for you to get back to your feet after filing bankruptcy. If you hurry to repair your credit or purchase some assets then you might fall prey to the traps set by the lenders. So plan your moves accordingly.