Dear Bankruptcy Adviser,
I am trying to finance a car through a lender. Years ago, I included a balance left over from a car repossession with this same company in a bankruptcy that I filed.

The new loan was about to be approved, but at the last minute, the lender’s agent told me that since I filed bankruptcy on them before, they can’t give me a new loan.

Can they do that? Can they refuse to finance my car loan because of a previous bankruptcy?
— Eileen

Dear Eileen,
I love this question. I love it because it is very surprising to see how people think about credit and bankruptcy. However, I don’t think it is an unreasonable question. In fact, I completely understand why you think this way. I would say many clients of mine think this way. I have received this type of question numerous times.

I always give this example to my clients when they ask me this question.

You lend your friend $500. He says that he will pay you back in 30 days. But, 30 days go by and he has not paid you any money. You ask him when he is going to pay, and he says “soon.” You can choose to follow up with him or just wait for him to pay.

Either way, are you going to lend him money again? Probably not. “Fool me once, shame on you. Fool me twice, shame on me.”

This goes to the heart of people’s perceptions about debt. I don’t know what percentage of people think this way, but it is not minuscule. People see money owed to a credit card company, a bank or a finance company differently than money loaned to family or friends.

Yet, it is exactly the same. Money borrowed with the intention to pay it back is a loan — nothing more, nothing less.

In your case, you burned this company once. Shame on you. If they give you more money and a second chance, shame on them.

I do believe people deserve a second chance. I know that people file for bankruptcy protection for very specific reasons: illness, divorce or loss of employment. Life is long. We make mistakes. Sometimes, things happen that are out of our control.

However, lenders can make their own business choices, too. A lender has no legal obligation to give you a second chance, yet many will. My clients open up new accounts with the same companies listed in the bankruptcy schedules — in some cases, a few months after filing.

That is a business decision to give you a second chance. Here, the decision was not to.

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