Have you ever loaned a friend or family member money? Maybe it was way back when you were 12 and your 16 year old sister really wanted your babysitting cash because she was headed to California with a friend and REALLY wanted to go shopping at the outlets on the way. Maybe it was last year when your buddy from college had to buy a bigger car because his wife was having a baby and he needed some cash for a down payment. Regardless of when it happened or why they needed the money or why you gave it to them – you remember it. It’s likely you don’t spend your days angry at them about it or counting all the ways your life would be better if you hadn’t loaned it to them or if they had paid you back. You forgive them, but you don’t forget. If they were to ask you again, you might chuckle and say, “No way! I did that before and it didn’t work out too well.”
Yet even knowing this about ourselves, many of us will still find it surprising…even shocking…when an old creditor (included in a past bankruptcy) declines to offer us new credit. Even if the bankruptcy was years and years ago, has since fallen off your credit report and you now have excellent credit, a company may choose to look at the historically significant fact that they did not receive payment on their last loan and decide doing that again is not in their best interests. They are in fact saying the same thing we decided you might say in the scenario above, “No way! I did that before and it didn’t work out too well.”
They’re not mad at you. They aren’t out to get you. They’re refusal to offer you a loan does not mean you are a bad person or that you can’t get a loan from someone else. They are simply exercising their right to avoid repeating the same actions they made in the past that did not end well for them.
Many bankruptcy filers who end up in this situation will feel wronged. They will feel as if the company’s refusal to forget the past indiscretion is somehow in violation of the rules of bankruptcy. That’s understandable as well. That’s why I started off by making it personal. No one would fault you for refusing to lend your buddy money for another car purchase given that he never paid you back the first time you did. It’s completely normal – logical even.
We think of credit cards and auto loans and the creditors who hold the debts as different than personal debts somehow. Yet it’s the same thing. Money borrowed with the intention to pay it back is a loan – nothing more, nothing less. Try not to be insulted if you run into an “old creditor” that doesn’t want to lend you money again – even though you have a great job, a stable income, and an excellent credit score. Just let them have it. And work with a different lender to accommodate your needs.
If you have questions about how bankruptcy will affect your ability to obtain a loan after filing, please get in touch with one of the experienced southern California bankruptcy attorneys at Westgate Law.