how bankruptcy works in canada
The six questions lenders will send after your bankruptcy Ask
When I started a loan request after my bankruptcy I noticed a trend.
Lenders would ask me the same set of questions over and over again. They seemed to care all have a few important things. Of course, now I know they tried to quickly judge whether I is creditworthy or not.
You see, after you file for bankruptcy, lenders will be very careful in determining when loans extend, should you (and rightly so).
Can you blame them?
After bankruptcy your number one mission is to make the lender you are now a low credit risk to prove.
So what do they want to see from you? The right answers to the following six questions.
Question 1: Are You dismissed?
The first thing a lender must confirm is if your bankruptcy is discharged. Or in other words, if your bankruptcy is completed.
The reason lenders want to know that you are dismissed, because if your bankruptcy is still "open", then you could technically still add to your accounts bankruptcy (Including the lender you apply to). Not many lenders will grant you credit if you are still in, do in your bankruptcy.
Make sure to not confuse the term "discharge" with the term "archiving".
I hope you're not one of the poor saps that I had a bankruptcy discharged.
After a dismissed bankruptcy is bad, bad, bad. You get basically all the negative effects of the bankruptcy, but none of the benefits, since your bankruptcy was not completed.
It's like paying off a collection of your accounts … then implementation of the collection Account will remain on your credit reports. So your FICO credit scores to increase at all. They remain the same.
But there is hope even if you already dismissed been. So do not throw in the towel just yet. Life's a garden-dig it … Plant some seeds of hope … and watch it prosper … You can still use the process increase your credit scores.
Question 2: When was your bankruptcy discharged?
This is very simple.
The more time passed, since then has your discharge, the better.
You see, everyone has different lender credit guidelines. A lender's credit guidelines are essentially the Minimum requirements, you have to meet, in order for them to approve your application.
For example, it will not be able to finance a new car by a low interest lender until you are discharged. Being discharged is a basic guideline when financing a car loan after bankruptcy.
Getting Started for a secured Visa ® or MasterCard ® approved is relatively simple. Only the dismissal and submitting your deposit, the two main criteria.
Unsecured Credit card lenders credit policies may differ. Some lenders will not touch you until the bankruptcy no longer appears on your credit reports. If you discharge debt with Some lenders that you will never get another card with them until the debt paid back (for example, American Express ®). There are lenders that will give you a second chance but it is not soon after your discharge (so do not stop breathing).
Mortgage lending value requirements are more complicated. How much time did you notice after you are discharged, what type of mortgage financing for your consideration.
Anything less than 24 months after your discharge and you are as a sub-prime borrowers. If more than 24 months after discharge you may qualify for more conventional mortgage programs.
Chapter 13 filers have even more options for getting a mortgage after bankruptcy, most of which are determined by the amount of time since your filing.
follow Sun, have been much time as since your dismissal. Or if They declared Chapter 13, how much time since you filed. They are to save important data.
Question 3: How have you paid your bills since your discharge?
Late payments, which are released on your credit reports after a bankruptcy kiss of death.
Some lenders even later than 1 day after the Due date to be enough for them to report a 30-day late payment of the credit reporting agencies. The reason is that technically, they count all in the 10-30 day late payment of the same series. So even as a day late could cause burns.
Bottom line-don't be late. Pay early in the worst case on time. We can not afford to come late.
The lender will be to see how your credit since your discharge treated.
And if you think late payments hurt you … Collection accounts, judgments and other evil things back as those will be many more.
You must be able to a lender that you say, all paid early or on time since your discharge. If they assess your credit reports they will see what you say is true.
Question 4: Do you have re-established new credit since your discharge?
Avoidance is not recovery.
Although It is good if you reaffirm a few credit accounts through your bankruptcy, it's even better if you can prove that you have set up a new line of credit lender since Their release.
The new types of loans you have to aim for are:
– Home Mortgage
– Car Loan
– Car Lease
– Credit Union loans
– Bank loans
– Overdraft protection
– Credit Cards
– Retail Credit Card
– Gasoline Credit Card
– Home equity loan
– Student Loans
The Catch-22 is that the lender you really want to continue with the work of really want the first, which will be to grant loans. It can be frustrating trying to open that first account-which is why you need a strategic plan of the Attack. In other words, not for a business loan (which can get difficult to turn), if you do not even qualify for a secured credit card yet.
But it all starts with you. I'm saving you even months-years-worth of trial and error. But you have the information they presented and in action. So, at to get it!
You simply will not recover unless you jump back into the fire and prove to the world to effectively manage credit.
Question 5: How much do you have for a down payment?
It will be necessary in most cases, be able to come up with a down payment or deposit. So start saving! Lenders do not take food stamps or post-dated checks.
As general rule of thumb rule, if all your payments as agreed at your last Car made, you should plan on no more than $ 500 to finance a new car to a normal interest rate … that is, if you follow what I teach in the free credit cards After Bankruptcy seminar.
On the other hand, if you will be missed or late payments on your last auto loan, your only option is most likely from 20% to a high interest rate through a finance company.
If a car dealer to you is, to say with more money, you're either at the wrong dealer … or you have to wait until you have restored your credit card a little more.
If you secure a good credit card plan to deposit about $ 250 to $ 500 It are some secured credit cards that you may have received that lower deposits, but I do not recommend it. Most of the lower deposit cards have hidden Cost … not correct the credit reporting agencies … and usually have higher interest rates to boot report.
A payment on a house is of course the amount of the mortgage off. Although 3% to 10% of the purchase price is the norm, it is more than possible for a mortgage for no money get down. And I do not speak by some crazy TV infomercials that promise you the world. I appreciate real, bona fide mortgage talk programs.
So be prepared. Have a little money down, to show you're a playa.
Question 6: What are your credit scores?
You can of course knew that this come, right?
Back when I recover from bankruptcy, credit scoring was just starting to become popular. You could not even purchase all 3 of your Credit scores before 2003.
Today credit scores are used by almost every lender in the U.S. and Canada.
If you do not know your FICO credit scores You should.
Most importantly, you need to know the credit reporting agency has your …
… Highest credit score
… Your credit score MIDDLE
… And Your lowest credit score
To win the greatest impact on all lenders it with the lender that the credit reporting agency that your HIGHEST FICO score, has should work used. How to obtain the lowest interest rate and best terms.
A final comment
So there you have it. The six questions lenders will ask for the bankruptcy. As my scout group taught me many years ago … be prepared.
Favors a prepared mind chance.
About the Author
Stephen Snyder is the founder of the After Bankruptcy Foundation a non-profit organization that helps people recover after bankruptcy. He has helped thousands of people obtain a credit card after bankruptcy with a fair interest rate.
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