One of the problems when one declares bankruptcy is to know if one will be able to borrow in the future. People often hesitate to declare bankruptcy, even when it is their best option , for fear of not being able to borrow. Even if immediately after the bankruptcy the creditors are less inclined to lend money, in the end, they lenders prefer the people who declared bankruptcy because it shows a desire to improve the situation.
Why would a creditor lend money to someone who has declared bankruptcy before? For 3 reasons mainly. First, the creditor’s ability to offer better terms. Second, the lack of debt following bankruptcy. Third, the best financial management of people who have declared bankruptcy.
Get more favorable terms
Creditors make more money when they are able to charge you more interest. In fact, many credit companies make more money with interest rates than with profits on their merchandise. People in bankruptcy are often unable to demand advantageous terms, unlike people with an excellent credit history. Even if the debtor demonstrates better management of their portfolio, the creditor will still charge a higher interest rate.
Do not have debts
Some people who become insolvent are able to cancel all their debts, although this is not the case for everyone. The ability of the person to repay his debt and the amount of the debt will play a role in the cancellation of the debt or its maintenance. In any case, the monthly payments for people who have declared bankruptcy in the last five years are much less than pre-bankruptcy payments. Why ? Because the creditor is more likely to receive his payments on time, now that he is not competing with other creditors. Creditors prefer to have business with people who have gone bankrupt because the chances of being repaid are greater.
Learn from your mistakes
Although some people go bankrupt and learn little, there are others who learn from their mistakes. For example, in the United States, the main reason for bankruptcy is medical debt. Subsequently, these people, or few of them, will fall into the same trap of medical debt. Others will learn how to better manage their budget and will even seek advice from specialists. These examples show that people who declare bankruptcy improve their financial management, which is a positive factor for them as both debtors and creditors.
In conclusion, creditors encourage post-bankrupt debtors to apply for loans. In fact, a debtor in this situation is even seen as the perfect candidate for a loan under $ 5,000. For more information, please contact a representative of Prêts Québec.
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