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Can you still borrow while repaying a bankruptcy plan?

On Behalf of | Jul 3, 2024 | Personal Bankruptcy

Bankruptcy can feel like a fresh start, but what happens when you need to borrow money while still repaying your bankruptcy plan? You may need to apply for a car loan, pay rent or face other unexpected expenses.

This blog will explore your options for borrowing while in bankruptcy, helping you determine the next steps to take and factors to consider. Read on to know your options on how to move forward financially, even during bankruptcy.

Borrowing while in bankruptcy

It is possible to apply for a personal loan while you are still paying off your bankruptcy plan. However, there are certain things you must prepare for before taking out a new loan.

In some cases, your trustee court will only allow you to incur new debt if it is necessary for you to continue to make payments. For instance, if you apply for a car loan because you need a new car to drive to work, the court may allow you to borrow funds. It is crucial to know that filing for bankruptcy may also negatively affect your credit score. Your bankruptcy filing will remain on your record for seven years, which may discourage some lenders from approving your loan.

Today, some personal loan lenders require borrowers to have a credit score of at least 600. If your credit score is below that, you may need to look for a lender with more lenient requirements.

Recovering financially after bankruptcy

Bankruptcy offers a path to financial recovery, even when you need to borrow during your repayment plan. It gives you breathing room to rebuild your credit and regain financial stability. With careful planning and proper guidance, you may get the financial support you need to set a strong foundation for your future.