Loan application filer wants to know if he has to disclose an old bankruptcy on his application form.

QUESTION.
When applying for a start up loan with my bank, if I have had a personal bankrupcy 10 years ago do I still have to disclose it? My divorce then was horrible enough without reliving it if I do not have to.

ANSWER.
It all depends on the specific loan application form that you are asked to complete. Not all applications ask you if you have EVER filed for bankruptcy. Few banks really care if you have a bankruptcy on your record. What they care about is whether you have the ability to repay your loan NOW and in the foreseeable future. In fact, if you have filed for a bankruptcy in the past 6 years then you are a better loan candidate than someone who hasn't. This is true because bankruptcy filers are foreclosed from filing another bankruptcy for 6 years after being discharged in bankruptcy. That 6 year window allows a bank to go after your assets free of being kept from doing so by a bankruptcy court.

In any event, if a divorce caused you to go bankrupt, then you have a good explanation for the bankruptcy happening. Don't worry about having to disclose the bankruptcy. What you need to worry about is putting together a good business plan so you will qualify for a small business loan. Of course, you may be applying for a home equity loan. In that case, you don't need to put together a business plan to qualify for the loan.

I hope my comments are helpful. Good luck! Regards, -Jeff

Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
www.scoreprinceton.org
http://www.jlippin.com/