One of the first things you might want to do after a bankruptcy discharge is to repair your credit. As you know, getting approved for a loan is one of the most effective ways to do this. You and other Connecticut residents may find it encouraging to learn that you may have many borrowing options after a bankruptcy. However, you should also learn how to recognize a valid lender from one that is considered predatory.
As NerdWallet explains, predatory lenders often target people fresh out of a bankruptcy or with few financial options, because they are more vulnerable and often eager to get a fresh start and repair their credit. Unscrupulous lending practices can quickly backfire on you and leave you with additional insurmountable debt and ruin your credit again.
Predatory lenders often take the form of payday lenders, “too good to be true” loan offers in the mail or loan consolidation offers. They may also involve certain auto loans or mortgage refinancing. A predatory lender will often use hard-sell tactics to make you feel obligated to comply or might deliberately withhold important information about the loan’s terms. A bad loan often comes with inflated interest rates and fees, and you might be pressured into adding unnecessary products, such as credit insurance, further raising your costs.
If a loan seems too good to be true or if you have doubts that you can’t quite explain, you might protect yourself by listening to your gut feeling. A financial advisor should be able to help you distinguish a good loan from a bad one. This information is meant to educate you but should not replace the advice of a lawyer.