Can Bankruptcy Help Me Qualify For A Fresh Start Loan?

Bankruptcy is one of the primary reasons that fresh start loans exist, so yes, it can help you qualify. A fresh start loan is generally a small to moderate loan, often in the $500 to $5,000 range with a shorter repayment period, usually six to thirty-six months. The stated purpose of these loans is specifically to allow for positive credit reporting on your credit after a negative financial impact, such as bankruptcy, allowing for your credit score to recover.

If you are considering a fresh start loan, you must take a few factors into account. This is a prime area for predatory lending, with many sub-prime lenders targeting individuals coming out of a financial hardship in order to get them back into debt. Stick with a known, reputable lender. The interest rates on these loans are often well-above the market average and the terms are very strict, even when dealing with a reputable lender. While the stated purpose of the loan is to rebuild your credit, any late or missed payments will have the opposite effect, keeping your credit score low. It is generally advisable to gain control of your budget and build an emergency fund prior to taking on any type of new credit, particularly a longer-term loan. If you elect to do so, you need to be 100% confident that you will be able to make the required payments in full and on time every month in order to gain the benefit to your credit. When these loans are used responsibly, they can be effective in rebuilding your credit score.

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