If you’ve recently declared bankruptcy due to financial trouble, the last thing on your mind is probably obtaining a new line of credit. However, there may be some scenarios in which emergencies arise while your business is going through bankruptcy. Depending on your situation, you may be able to obtain personal credit cards or loans to help relieve the financial stress.
Get permission from a court
While a bankruptcy court is unlikely to approve a new credit request or a new loan, you can apply for a new loan in Chapter 13 with a judge’s permission. You will have to fill out forms detailing the terms of the loan and the source of your payment funds. You will also have to show how you will be able to make repayments.
Consider payment plans
Before looking into credit to pay an unexpected bill or for an emergency, try to set up a repayment plan for any bills you may encounter first. If you have an account with a supplier, inquire about possible ways to break up payment over time. Personal medical emergencies could add significant financial stress to your current situation, but payment plans are almost always available. Most hospitals cannot charge interest and only require small monthly contributions. A modest payment of $50 or $25 can be enough to keep this bill out of collections.
Try alternatives to credit
When you’re going through a business bankruptcy, it can feel like your personal assets are frozen with nothing to fall back on, but there may be some assets you can sell that can help you make ends meet. Take an inventory of assets with significant value and consider selling them to generate cash.
You may also consider borrowing from friends or family. In times of need, they may be able to lend a helping hand. Another option is to look into government grants and assistance. The U.S. Small Business Administration has loans for small businesses going through bankruptcy. There are also many organizations and agencies that offer loans or grant money in certain circumstances.
Consider a title loan
Another option is to take out a title loan, where your car or property serves as collateral, like a home equity line of credit (HELOC). With a HELOC, you can make payments for up to 20 years, or when your situation stabilizes, you can pay off the remaining debt in larger portions to reduce your repayment time. You will have more flexibility with repayment options on HELOCs than on personal loans because creditors allow variable interest rates. In some cases, it may be possible for you to use your entire line of credit instead of just borrowing a portion that matches how much equity you have in your home.