Bankruptcy can damage your personal credit score for as long as 10 years. While it’s possible to find a loan when you have bankruptcy on your credit report, you could be limited to lenders that charge rates as high as 300% APR. Our team reviewed over 260 personal loan and payday lenders to help you find the right type of financing.
7 loans you can apply for after bankruptcy
These personal loan, installment loan and payday loan providers that might accept you even with borrowers Chapter 7 or Chapter 13 bankruptcies on your credit report.
Possibly. You’ll be more limited in terms of the lenders you have to choose from, but there are options available to you. The fees and interest rates may be considerably higher on a loan after bankruptcy, and you may be required to attach an asset as security or apply with a guarantor.
Compare short-term loans you can apply for online
Be sure to visit the lender’s website or call its customer service line to confirm the eligibility criteria before applying to make sure they accept applicants in bankruptcy or with bankruptcy on their credit reports.
Can I get a loan if I have a bankruptcy on my credit report?
Having a bankruptcy on your credit report may look bad to most traditional lenders, but lenders offering short-term loans tend to be more lenient in their eligibility criteria. You may want to consider applying for a bad credit loan to increase your chances of approval.
Get a personal loan after bankruptcy with an online lender, credit union or community development financial institution (CDFI). Banks usually consider people with past bankruptcies to be too risky to offer loans. But some credit unions and CDFIs offer payday loan alternatives to all credit types, usually with lower rates than payday lenders.
As your assets and income may have been affected by bankruptcy, deciding whether or not you can afford the repayments is an important consideration. What will your repayments be and how will they work with your budget?
Applying for a loan when you’re in any challenging financial situation isn’t a decision that should be taken lightly. This is especially true when you’re bankrupt. Consider why you’re taking out the loan and if there are any other way you can pay for what you need.
What kind of bankrupt loans are available?
If you’re in need of financing and you’re currently bankrupt or have a bankruptcy listed on your credit report, the following loan options might be an available to you.
Payday loan. These are short-term loans up to $2,000 with repayment terms between two weeks and one year. Lenders have flexible lending criteria, and while they won’t all consider bankrupt applicants, some will.
Auto title loan. Secured loans can be easier to get approved for than unsecured loans, as they’re less of a risk to a lender. Consider an auto title loan and attach your vehicle to the loan as security.
Personal overdraft. Your current bank may be willing to approve you for a small overdraft if you have a good history with the bank. This allows you to withdraw cash above your available balance.
While there are lenders who will consider applicants who are in bankruptcy or who have previously been bankrupt, filling out the application isn’t all it takes to be approved.
Here are some of the criteria that’ll likely be in place when you’re considered for a bankrupt loan:
Ability to manage your repayments. This is the main requirement lenders have when considering you for a loan. Does your income allow you to easily manage your repayments after taking into account your liabilities and debts? If your repayments will be manageable and you meet the lender’s other criteria, you’ll be able to apply.
Employment. You may be required to be employed, although there are some unemployed loans available. Different lenders have different restrictions. Some might not consider you if you’re self-employed or work part time. Check with the lender before applying.
Welfare. While you may still be considered for a loan if you receive welfare payments, lenders often have restrictions as to what percentage of your income can be made up of benefits — usually 50% if the restriction is in place. Usually, your loan repayments can’t exceed a certain percentage of your welfare income.
Income. How much do you earn? Lenders often have minimum income requirements in place. They may allow your income to be from employment and welfare or may need it to be solely from regular employment.
Assets. For loans after bankruptcy, the lender may require you to secure an asset to the loan as a guarantee in case you default.
Guarantor. If you don’t meet the lender’s criteria, you may be able to apply with a guarantor to increase your chances of being approved.
How does bankruptcy affect my credit and loan eligibility?
Are you currently in bankruptcy or have a bankruptcy on your credit report? Understanding the effects it has on your credit and your loan eligibility is important.
Your credit report. Chapter 7 bankruptcies remain on your credit report for up to 10 years. Other types remain on your credit report for up to seven years.
Your credit score before bankruptcy. If you had poor or bad credit before you declared bankruptcy, then your credit won’t take a huge hit. This means lenders will take into account your history before and after bankruptcy and make a decision based off all the facts.
Loan eligibility. Lenders may view your application as risky since you’ve demonstrated your inability to pay back your debts in the past. Once you find a lender willing to provide you with a loan, make sure you’re able to repay it in order to avoid falling into a debt spiral again.
Higher interest. Be aware that you can’t file for bankruptcy again for a few years. This means that predatory lenders — both for cash advances and credit cards — will offer you money at very high interest rates. If you can avoid taking out a loan, you should. Otherwise, you might find yourself stuck in another, often worse, debt spiral.
Building a positive payment history. If you do decide to get a loan, pay it off on time! This will help rebuild your credit after bankruptcy, and that means you’ll have access to better rates down the road.
Frequently asked questions
Answers to common questions about getting a loan after bankruptcy.
How long after Chapter 7 bankruptcy can I get a loan?
How long you have to wait after filing Chapter 7 bankruptcy depends on the lender. Generally, you have to wait until the bankruptcy proceedings are over to qualify with any lender.
After that, you can apply for a loan with a bad credit lender. However, most options are off the table for 10 years — the length of time a Chapter 7 bankruptcy stays on your credit report.
Do I have to disclose to lenders that I’m in bankruptcy?
If the lender’s application includes a question regarding bankruptcy, it can be considered fraud if you answer untruthfully. Besides, lenders can see if you have a bankruptcy on your credit report.
You can review different lenders’ eligibility criteria and call their customer service lines in order to find out which ones would consider bankrupt applicants before applying.
Can I apply for a loan to travel or take a vacation?
Some loans have restrictions on what they can be used for, while others don’t. Most short-term loans don’t have these kind of restrictions. Though it’s important be sure that you’ll be able to make the necessary repayments before taking on more debt.
Anna Serio is a trusted lending expert and certified Commercial Loan Officer who's published more than 1,000 articles on Finder to help Americans strengthen their financial literacy. A former editor of a newspaper in Beirut, Anna writes about personal, student, business and car loans. Today, digital publications like Business Insider, CNBC and the Simple Dollar feature her professional commentary, and she earned an Expert Contributor in Finance badge from review site Best Company in 2020.
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