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Doct · Jan 25, 2008, 11:44 AM

My personal bankruptcy fell off this month from all three credit reporters (10 years). I have waited for a long time now to apply for a large business loan. All lenders told me that anyone who has had a bankruptcy in the past would not be considered for a loan (I did not give them personal information at that time). Now that my bankruptcy is off the public records, will they have the ability to find this old bankruptcy? Any info would be greatly appreciated!

donf · Jan 25, 2008, 12:02 PM

To begin with, your bankruptcy will never be off public records. Any one who tells you that is lying to you.

What happens after 10 years is the Credit Bureau's stop reporting on the bankruptcy. It has nothing at all to do with Federal Records pertaining to a Bankruptcy partition.

Your issue is that you seem to think the agency did something wrong. I agree in principle that this is just another piece of irrelevant information, tens years after the fact.

If the lender is telling you they believe you falsified your information to obtain a loan, then I would counter with, no, I did not! I gave you information that is true and factual at this point in time. The Bankruptcy was related to personal problems, not business.

And then go to a Federal Watchdog Agency and tell them that you believe you were discriminated against by this firm based solely on information from 10 years ago that has nothing to do with current times.

See what happens!

Doct · Jan 25, 2008, 12:08 PM

Thanks for the reply Don. Is it a simple matter for the lender to find the bankruptcy then (if I didn't disclose the information in the loan application?

It would seem that I am stuck between a rock and a hard place then; to tell and be refused the loan, or not to tell, and have them assume that I'm attempting to not disclose information...

George_1950 · Jan 25, 2008, 01:11 PM

I don't think it is a 'simple matter' for a potential lender unless you make the disclosure. A point to consider is what difference does it make, ten years later? A lender's decision will likely be made on your recent credit experience; you could find that your lender will be sympathetic to the reasons you filed bankruptcy. Why not try a 'test' loan; go to a bank and fill out the application honestly, to purchase a Jaguar; see whether you are approved and get a copy of your credit report in the process. But then, have a change of heart and don't accept the loan.

Fr_Chuck · Jan 25, 2008, 02:10 PM

If the lender checks with the bankrutpcy court records, your record is always there. It just falls off the credit reports, Normally they don't check anything but credit reports

Doct · Jan 25, 2008, 05:35 PM

Originally Posted by George_1950

I don't think it is a 'simple matter' for a potential lender unless you make the disclosure. A point to consider is what difference does it make, ten years later? A lender's decision will likely be made on your recent credit experience; you could find that your lender will be sympathetic to the reasons you filed bankruptcy. Why not try a 'test' loan; go to a bank and fill out the application honestly, to purchase a Jaguar; see whether you are approved and get a copy of your credit report in the process. But then, have a change of heart and don't accept the loan.

Actually, I did just that, and no problem; however, the loan I will be applying for is a
$800K business loan (medical hospital loan). They are very specific, and on their applications, they don't simply ask "have you filed bankruptcy in the past 10 years," but rather "Have you EVER filed bankruptcy." If I say no, my attorney, who I spoke with today, said that if the lending institution found the bankruptcy, that I could be sued for bank fraud :mad: So, the rock and the hard place, is that the few lenders whom I've spoken with, has told me that if a bankruptcy has EVER been filed, then they would not consider the applicant for the loan.

Suggestions??

Fr_Chuck · Jan 25, 2008, 06:43 PM

Yes, is the business applying for the loan? I would suspect you have a LLC or some corporatoin set up and they are getting the loan, not you personally. If you are filling out a business application as a officer of the corporation, then it wants to know has the business ever filed bankruptcy.

If this is a personal loan ( an if it is, we need to talk about the need for a corporation) and they ask "ever" you would have to tell the truth.

George_1950 · Jan 25, 2008, 08:23 PM

Doct writes: "...my attorney, who I spoke with today, said that if the lending institution found the bankruptcy, that I could be sued for bank fraud." This would occur if you didn't pay; not likely you would be sued for fraud as long as you are meeting the terms of your agreement. Once again, I think you should 'modify' your perception of having filed bankruptcy. Bankruptcy is not a crime and you have completed the process, so it's time to move on. Have a copy of your bankruptcy papers if you need them, but just answer truthfully and let the chips fall where they may. You do not have to apologize for having filed. My view is that if the lender doesn't want you (and your money), find another.

Doct · Jan 26, 2008, 09:06 AM

Originally Posted by Fr_Chuck

Yes, is the business applying for the loan ?? I would suspect you have a LLC or some corporatoin set up and they are getting the loan, not you personally. if you are filling out a business application as a officer of the corporation, then it wants to know has the business ever filed bankruptcy.

If this is a personal loan ( an if it is, we need to talk about the need for a corporation) and they ask "ever" you would have to tell the truth.

I had planned on the business that I'm trying to purchase be the LLC/corp; but I may have to start one up prior, and then the LLC/Corp make the purchase. So if I develop a LLC/Corp, wouldn't it take a tremendous amount of time to establish a credit history for the business with enough clout to borrow a large sum of cash as in this case?

s_cianci · Jan 26, 2008, 09:17 AM

If it's been more than 10 years (and according to your post it has been), you shouldn't have a problem.

George_1950 · Jan 26, 2008, 10:01 AM

Doct writes: "I had planned on the business that I'm trying to purchase be the LLC/corp; but I may have to start one up prior, and then the LLC/Corp make the purchase." Lenders will have you sign individually as well as corporately.

donf · Jan 26, 2008, 10:21 AM

Ah,

But that he is having a problem! So saying he shouldn't is pointless.

Doct, Talk to the Federal Small Business Agency. Explain that you are trying to acquire an existing LLC and then move it into the Health Care System.

However, you are being denied a loan because 10 years ago you went through a personal bankruptcy. Ask if this is practice is allowed under current government guidelines or can they provide other financial resources for additional help.

wewed100606 · Jan 26, 2008, 01:33 PM

Be honest with the lenders plain and simple. They are what is going to control your businesses success unfortunately. You will be the personal guarentor on the loan with the LLC being the borrower. If these banks won't allow you to borrow because of a 10 year old banko you need to look harder for lending sources. There is nary a single successful entreprenuer in this country who hasn't filed a banko at one time or another. Get online, find some national lenders, maybe go through the process of getting private investors who are more willing to see the person and the potential for repayment and profit. I think you will find that if your credit has been SOLID since the banko and your business plan is STANDOUT then you will have no problem getting someone on board. You just got to get creative my man! Rule number one in owning your own business... BE RESOURCEFUL!

If you have personal assetts make sure you let the lender know you are willing to put those against the loan. Just quick being a wimp bud... DIVE IN! The water is grand!

Doct · Jan 27, 2008, 07:43 AM

Originally Posted by wewed100606

Be honest with the lenders plain and simple. They are what is going to control your businesses success unfortunately. You will be the personal guarentor on the loan with the LLC being the borrower. If these banks won't allow you to borrow because of a 10 year old banko you need to look harder for lending sources. There is nary a single successful entreprenuer in this country who hasn't filed a banko at one time or another. Get online, find some national lenders, maybe go through the process of getting private investors who are more willing to see the person and the potential for repayment and profit. I think you will find that if your credit has been SOLID since the banko and your business plan is STANDOUT then you will have no problem getting someone on board. You just gotta get creative my man! Rule number one in owning your own business...BE RESOURCEFUL!

If you have personal assetts make sure you let the lender know you are willing to put those against the loan. Just quick being a wimp bud...DIVE IN!! The water is grand!

Hahaha, the last part is cracking me up dawg, hahaha. Anyway, very good point, and I was sure hoping to go the easier way, you know, just sign my entire life away for the loan, pay it off, and make my first million; but, as usual, probably not going to happen. Looks like I may have to become very creative in order to get what I want.

Thanks for all the input guys, you've all been very helpful, and if you're interested, I'll post as I go along in this process to keep you informed.

DocT

excon · Jan 27, 2008, 07:57 AM

Hello Doc:

Here's my take.

If you say no, and they find it BEFORE they give you the loan, then they're just not going to give you the loan. If they charged people who lied on their application with fraud, everybody would be in jail. If you say no and they loan you the money, and you pay it back, then they'll never find it, and won't charge you with fraud in any case, cause it's not a fraud. A fraud is only when you cheat them out of their money. If you say no, and they LOAN you the money, and you DEFAULT, they will find it, and you WILL be charged with fraud.

Bankruptcy, as opposed to collections and local judgments, are federal. There's only ONE federal court. Therefore, in my view, it's not going to be too hard for them to find it if they look. For $800K, I'll bet they look.

excon

Doct · Jan 27, 2008, 08:54 AM

Originally Posted by excon

Bankruptcy, as opposed to collections and local judgments, are federal. There's only ONE federal court. Therefore, in my view, it's not going to be too hard for them to find it if they look. For $800K, I'll bet they look.

excon

That's my thoughts exactly. Thanks for the input!

ScottGem · Jan 27, 2008, 09:03 AM

First, your attorney is correct that not disclosing the bankruptcy if that question was asked would be fraud. This would result in a denial of the loan. If the fraud is discovered after the loan is granted, they could call the loan. However, you probably would not be criminally prosecuted unless you default.

But I agree with Chuck, you should set up a corporation to purchase the business, not you personally.