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Personal Loans After Bankruptcy: Factors, Sources & Alternatives

Lendstart Updated: October 23, 2023 • 6 min read
man thinking about bankruptcy

Key Points:

  • The two primary types of personal bankruptcies are Chapter 7 and Chapter 13.

  • The impact of bankruptcy on your credit report gradually diminishes over time. 

  • Making timely payments on existing debts and avoiding additional debt can help you build a strong credit history and improve your chances of receiving loan approval. 

Navigating the financial landscape after bankruptcy can be challenging. Now, you're left wondering, "Can I get a loan after bankruptcy?" or "When can I get a loan after bankruptcy?" This article explores the factors influencing your ability to secure personal loans after bankruptcy, potential loan sources, and alternatives you may consider.

Factors That Affect Your Ability to Get a Personal Loan After Bankruptcy

To begin, it's helpful to understand several factors that may affect your ability to get a loan after bankruptcy. These include:

The Type of Bankruptcy Filed

The two primary types of personal bankruptcies are Chapter 7 and Chapter 13. Each one affects your eligibility for personal loans with bankruptcies differently. 

Chapter 7 Bankruptcy

In this case, the bankruptcy trustee sells all of your assets, which may include a car or home. The goal is to use those funds to pay creditors and discharge any remaining debts. 

Once you've filed for Chapter 7 bankruptcy, it can remain on your credit report for seven years. You'll likely have difficulty getting approved for new loans during this time—if you do get approval, the interest rates you get will likely be high.

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Chapter 13 Bankruptcy

A Chapter 13 bankruptcy, also referred to as a wage earner's plan, is a legal process that enables individuals to reorganize their debt obligations to retain their valuable assets. It helps debtors establish a repayment plan that allows them to make affordable monthly payments to creditors over an extended period of time (typically three to five years). 

Through this process, creditors may receive only a portion of the total amount owed, allowing debtors to regain control of their financial situation and work towards a brighter future.

We explore various debt relief solutions in more detail in this article.

When You Filed for Bankruptcy

Time is a critical and integral element in this equation. As the days turn into weeks and the weeks into months, the impact of bankruptcy on your credit report gradually diminishes over time. 

Ultimately, the question of "when can I get a loan after bankruptcy?" is not solely dependent on the fact of filing but also on the duration that has passed since the filing. 

The longer the time since your filing, the more favorable your chances become. This means patience and perseverance will serve you well as you navigate the path toward rebuilding your financial stability and securing potential loan opportunities.

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Credit Score and History

Post-bankruptcy, you'll need to work on rebuilding your credit. Lenders are more likely to extend loans to individuals with higher credit scores and a more consistent credit history, even if there's a bankruptcy in your past. They also look for indications you have a steady income and are managing money responsibly.

This makes it more important than ever to carefully consider all your financial decisions in the aftermath of filing for bankruptcy. For example, taking on more debt than necessary or missing payments can quickly erase any progress made toward rebuilding credit.

On the other hand, making timely payments on existing debts and avoiding additional debt can help you build a strong credit history and improve your chances of receiving loan approval. 


A steady income can boost your appeal in the eyes of lenders. Higher income might mitigate some of the risks associated with loans after bankruptcies. It also suggests you're more likely to be able to meet your financial commitments in a timely manner.

Many lenders might also assess your debt-to-income ratio, which compares the money owed to income earned monthly. A low debt-to-income ratio helps with securing loan approval after bankruptcy. 

Type of Personal Loan

Another key factor to consider when seeking a loan after bankruptcy is the type of loan you're applying for. Some lenders may allow secured personal loans for those with bankruptcies on their records, while others may be more likely to offer unsecured loans. 

Secured loans may be more accessible to obtain after bankruptcy than unsecured loans. With a secured loan, you offer collateral, which reduces the lender's risk. Loans with bankruptcies are often easier to get when they're secured.

Don't miss these big mistakes to make on your path to relieving debt next.

How to Secure Your First Personal Loan After Bankruptcy

Here are some of the steps you can take to secure your first loan after bankruptcy.

  1. Assess Your Financial Situation: Before you even start, take stock of your financial health. This helps you determine the type of loan you can realistically qualify for and how much debt you can take on.
  2. Work on Improving Your Credit Score: As we mentioned earlier, your credit score plays a crucial role in whether or not you'll be approved for a loan after bankruptcy. Take the time to work on improving your credit score before applying for a loan. For example, paying off any outstanding debts and keeping up with monthly payments.
  3. Consider a Secured Loan: If your credit score is still recovering, it may be beneficial to consider a secured loan. This type of loan requires collateral and can often have more favorable terms for those with bankruptcies on their record.
  4. Shop Around and Compare Lenders: Don't settle for the first lender that offers you a loan after bankruptcy. Shop around and compare different lenders—they may have varying eligibility requirements and interest rates.
  5. Be Prepared to Explain Your Bankruptcy: When speaking with potential lenders, be prepared to explain the circumstances of your bankruptcy and how you've worked toward improving your financial situation since then. This can help alleviate any concerns they may have and increase your chances of approval.
  6. Start Small: It's important not to take on too much debt immediately after bankruptcy. By starting small and gradually building up your credit, you can demonstrate responsible financial behavior and boost your chances of securing larger loans in the future.

Where to Find a Personal Loan After Bankruptcy

You have a few options when it comes to finding lenders who offer loans after a bankruptcy. Here are some of the most common places to look:

  • Online lenders: Many online loan platforms offer personal loans after bankruptcy. 
  • Credit unions: Many credit unions provide loan opportunities to those with poor credit histories, including those who have recently been through bankruptcy proceedings.  
  • Bankruptcy lenders: These lenders specifically target people who recently filed for bankruptcy. 
  • Payday loan companies: You cannot overlook the risks of payday loans. Still, they can be an option when all else fails or if you need cash fast.

It's also worth researching any local organizations offering small personal loans or other forms of assistance. They may be able to provide you with a loan on more favorable terms than what is available from traditional lenders. 

Alternatives to Unsecured Personal Loans After Bankruptcy

Remember, there may be other financing options if you don't qualify for a traditional loan.

  • Home equity loans: If you own a home, this is an option, but proceed cautiously. We explore the pros and cons of this option here.
  • Credit builder loans: Aimed at helping you rebuild credit.
  • Family and friends: Personal loans from people you know.
  • Community programs: Look for local or community-based financial programs designed to help individuals in your situation.

The Bottom Line

Understanding your options for personal loans after bankruptcy requires knowing the factors lenders consider, where to look for loans, and the alternatives available to you. While it's not always easy, obtaining a loan following bankruptcy is possible.

For more guidance and support along the way, turn to Lendstart for the resources you're looking for. We make it easier than ever to review and compare financial solutions (including bankruptcy loans) that experts verify.



How long do I have to wait to get a loan after bankruptcy?

The waiting period varies depending on various factors, including the type of bankruptcy and the lender's policies. In general, it can take anywhere from a few months to several years.

Are there lenders who specialize in loans after bankruptcies?

Yes, there are some lenders who specialize in providing loans to individuals with a less-than-stellar financial history, which may include bankruptcies or other credit challenges. These lenders understand everyone's financial situation is unique and believe in giving people a second chance to rebuild their credit and improve their financial well-being.

What are the typical interest rates for personal loans after bankruptcy?

Interest rates are typically higher for individuals who have filed for bankruptcy due to the increased risk associated with lending to them. Lenders often consider bankruptcy as a negative factor when assessing creditworthiness, leading to higher interest rates to compensate for the perceived higher default risk.

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