Personal Loans for Bankrupts

Personal Loans for Bankrupts
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Last Updated 15.05.2024
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It happens that due to difficult life and financial circumstances, a person has no other choice but to file for bankruptcy. This status damages the credit profile of anyone who wants to take out a loan. Therefore, it can be difficult to get some extra funding to cover personal expenses when you are bankrupt. But it’s still possible. And today, we will tell you how to get personal loans for bankrupts and consider everything you need to know to make the process smooth and trouble-free.

Can You Get a Loan After Bankruptcy?

If you file for bankruptcy, your credit score drops dramatically. Therefore, it becomes difficult to get different types of financing. The fact is that most lenders, including credit unions and banking institutions, refuse to provide loans to clients with a low credit score or special marks such as bankruptcy. They traditionally impose certain requirements you need to meet to be eligible for a loan:

  • Low DTI (debt-to-income) ratio
  • Fair, good, or high credit score (from 580 to 850 FICO scores)
  • Regular income

Lenders who are willing to provide financing to clients with bad credit or bankruptcy typically enforce rough conditions and terms on their products, which can include high fees and interest rates. However, it is not all that bad. There are authoritative lenders who make decisions on granting loans to bankrupts based on other aspects besides a bad credit profile or bankruptcy. These aspects include:

  • Type of declared bankruptcy (Chapter 7 or Chapter 13)
  • Reason for bankruptcy
  • Actual credit score (you can improve it over time)
  • Actual income level
  • Any debts the borrower still has
  • Other financial liabilities

One of the main aspects that affect your credit eligibility after filing for bankruptcy is time. Indeed, the more time has passed, the easier it is to get a loan with reasonable terms, especially if you are working on improving your credit score.

» COMPARE: Payday Loans for Unemployed

How Soon After Bankruptcy Can You Get a Loan?

People who cannot cope with their debts often have no choice but to resort to bankruptcy. The main question that interests them is how long to wait to get a loan. It all depends on the type of bankruptcy, as you can apply for a loan as soon as your debts are discharged.

Chapter 7

This type of bankruptcy is based on liquidation and can wipe out almost all your debts. However, the appointed trustee will confiscate and sell some of your assets so that you can pay off as many debts as possible. Nonexempt property that may be subject to liquidation includes your house, household goods, vehicles, and some other assets. Chapter 7 usually allows you to discharge your debts in 4-6 months. So this is a good option if you want to apply for a loan for bankrupts as quickly as possible.

Chapter 13

This type of bankruptcy does not wipe out your debts. But you can settle arrears yourself while avoiding asset forfeiture. To do this, you have to follow a special repayment plan which involves debiting funds from your bank account and usually takes 3-5 years to discharge the debt. What’s more, lenders tend to be more loyal to Chapter 13 bankrupts since such clients follow the established repayment plan, thus proving that they can pay a loan back.

How to Get a Personal Loan after Bankruptcy

It may take some time to get approved for a personal loan after bankruptcy, but the process will be smooth if you prepare in advance. Therefore, we prepared some simple steps to get personal loans with bankruptcies.

1. Prequalify for a loan. It’s important to choose the best lender so you do not end up in financial trouble again. Therefore, prequalifying for a loan with different lenders will help you analyze and compare all available offers to choose the one that meets your borrowing needs.

2. Decide on the amount of money. Make all the necessary calculations and determine the amount of the loan you are going to take. You can use an online calculator to identify how much you will need to pay for the loan each month.

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3. Apply for a loan. To apply for a loan, you need to prepare a package of documents that prove to the lender that you can repay the money on time. And so, you will be asked to provide:

  • Loan application
  • Proof of identity
  • Bank statements about your income for the last 3 months
  • Employer verification
  • Proof of address

4. Read and sign loan agreement. The lender reviews your application, accepts it, and sends you a loan agreement. Read it carefully and make sure everything is correct. Then, sign the agreement and wait for the money to be credited to your account.

5. Pay off your loan on time. Repayment days are fixed for each month and specified in the loan agreement. It’s better to sign up for autopay so as not to miss a payment. Moreover, this feature often comes with favorable discounts. What’s more, timely loan repayments can boost your credit score.

How Does Bankruptcy Affect Your Credit?

While filing for bankruptcy helps you get rid of your debt obligations, it has a negative impact on your credit profile as long as it’s listed on your reports. This period can last a different amount of time, depending on the type of bankruptcy. So, the derogatory mark of Chapter 7 bankruptcy remains on your credit report for 10 years. Moreover, all your discharged debts are listed there with a balance of $0. That is, even if you owe nothing, lenders will still be able to see this note on your reports. A mark of Chapter 13 bankruptcy remains on your credit report for 7 years. But if you fail to meet the conditions of the repayment plan, this period may increase to 10 years.

Both Chapter 7 and Chapter 13 bankruptcy may lower your credit score significantly. But there is good news. The negative impact of bankruptcy on your credit profile decreases over time. Thus, your score will gradually recover, even if you have a derogatory mark on your credit report. Of course, this is possible only if you do not violate the terms of a Chapter and pay your bills on time.

Alternatives to a Personal Loan after Bankruptcy

If you do not qualify for personal or payday loans for bankrupts or just seek lower fees and interest rates, explore other options to cover your financial needs.

Secure Credit Card

Secured credit cards are easy to qualify for and are available to everyone, including clients with low FICO scores. The peculiarity of this card is that the deposit you make to open it acts as your credit limit and, at the same time, collateral, which guarantees the card issuer that they will receive their money back if you cannot repay the debt. And so, you deposit a certain amount, and it becomes inaccessible to you, although it remains in reserve. You use credit funds, make purchases just like with a regular bank card, and return the borrowed money within a certain period. Card issuers will charge your deposit only if you miss a certain number of payments.

Home Equity Line of Credit

This is a good option for those who need larger sums of money. HELOC allows you to borrow funds on an as-needed basis using home equity as collateral. Thus, you may get as much as 85% of your home’s value. At first, you pay nothing but interest rates which usually start at 2%. But then comes the period when you have to return the money. Otherwise, the lender will foreclose on the equity of your home.

Co-signer Loan

A co-signer is a person who applies for a loan with you. Having a trusted relative or friend with a high credit score and excellent credit history can skyrocket your chances of getting approved. Co-signer is committed to repaying your loan and all associated fees if you default. Therefore, if you choose this option as an alternative to personal loans for bankrupts, try to repay the money on time so as not to hurt the friend who vouched for you.

Tips for Rebuilding Your Credit After Bankruptcy

Tired of looking for lenders who work with bad credits? Want to get loans with the most favorable terms? Then it’s time to improve your FICO score. Rebuilding your credit after bankruptcy can take time, but LoanSolution knows how to speed up the process. The following tips will help boost your credit score as quickly as possible.

  • Check your credit reports. Credit reporting agencies such as Equifax, Experian, and TransUnion are required to send you your credit report for free once a year. So, visit, request your report, and check it carefully. If there are any errors, feel free to report them.
  • Open a secured card. This is not only a good alternative to a personal loan for bankruptcy but also a solid option to rebuild your credit. By paying off loans on time, you will improve your credit score fairly quickly.
  • Get a credit builder loan. This is another good way to boost your credit score by making on-time payments. A credit builder loan is similar to a secured credit card in that it has fixed monthly payments and holds the money you borrow until you repay the loan in full.


Filing for bankruptcy can solve many financial problems, although it does damage your credit profile for years to come. So if you want to take out loans for bankruptcies, you will have to wait several months or years until your debts are discharged. But it’s not that bad. After all, you can use this time to boost your credit score to get loans with the best rates. Treat money responsibly, and you will never turn bankrupt again!

Carl Packman
Carl Packman
Author’s Page

Carl Packman is a researcher, broadcaster, and writer. He wrote several books, including Loan Sharks: The Rise and Rise of Payday Lending, which comments on personal debt and finance issues. Also, Packman wrote Payday Lending – Global Growth of the High-Cost Credit Market, which reviews the growth of the high-cost credit industry from the early 1990s. He boasts a BA in Film and Philosophy from the London Metropolitan University. Carl Packman is a valuable contributor on our platform, sharing great insights into lending. He has helped improve our website by doing his authoritative preview of different topics.

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