Going through bankruptcy can be a daunting experience. Many people who opt for bankruptcy report feeling as though they have failed. After all, amassing large amounts of debt that you cannot repay is not a position anyone envies. Still, bankruptcy can be looked at through a different lens when you consider its purpose. Most of us believe in second chances and that’s precisely what bankruptcy and the bankruptcy fresh start program can afford. The bankruptcy fresh start program gives bankruptcy filers the chance to rebuild their credit before waiting the seven-to-ten years it takes for the stain of bankruptcy to be wiped clean from their credit report. Let’s take a closer look at this program and the ways in which it is helping bankruptcy filers retake control of their credit.

Bankruptcy Fresh Start Lending Programs

When filing for bankruptcy, many people assume that they will be unable to have credit extended to them for at least seven years. They believe this because filing for bankruptcy often means that your credit will be severely impacted until the bankruptcy is removed from your credit report. While it is true that bankruptcy damages your credit, there are some lenders who offer fresh start lending programs to consumers who have recently filed for bankruptcy. These programs are designed to extend credit to recent bankruptcy filers in an effort to help them re-build their credit while they undergo the bankruptcy process. Not all lenders offer this program and many only offer these loans on vehicles or other small value purchases.

How Does It Work?

Most bankruptcy fresh start programs work by first determining if the recent bankruptcy filer is eligible. Lenders use different metrics in determining eligibility but most use some form of a payment-to-income ratio or debt-to-income ratio to determine the applicant’s current financial status. The filer’s credit score typically has no bearing on eligibility.

What’s The Catch?

Lenders may view loans granted to recent bankruptcy filers as high risk. As a result, these fresh start programs usually offer loans at higher than average interest rates.

After you file for bankruptcy, it is vital that you begin the process of repairing your credit. One of the most effective ways of doing that is by not only paying your current obligations that are affected by bankruptcy, but also by establishing and repaying new lines of credit. It’s important to note that fresh start program loans are not suitable for every recent bankruptcy filer including those with no source of income.

Florida Bankruptcy Attorneys

The Bankruptcy Team, PLLC is dedicated to assisting clients resolve financial dilemmas through bankruptcy, foreclosure or other legal avenues so that they can get back on their feet. If you are considering filing for bankruptcy, modifying your mortgage, or are facing unmanageable credit card or student loan debt, we are here for you. Our experienced attorneys will thoroughly review your situation and advise you about viable solutions. To consult with The Bankruptcy Team, PLLC, call or contact us today.