Home Credit Loans

Loans After Bankruptcy: What You Should Know

You can get a personal loan after bankruptcy, but it will cost you.

personal loan application
Updated November 4, 2024
Written by Rachel Alulis
Here at MoneyFor, our goal is to help you make informed financial decisions. We are committed to accuracy and impartiality in all our content. It’s important to note that articles may reference products from our partners who compensate us. This influences which products we feature and their presentation on our site, not our evaluation.

Key takeaways

  • It’s possible to get a personal loan after bankruptcy, though it will be harder to find a lender.
  • Credit unions, local banks, and online lenders offer loans with more lenient lending criteria.
  • To secure a loan post-bankruptcy, consider secured loans, a cosigner, or cash advance apps.

Personal loans are incredibly versatile. You can use them to consolidate debt, cover home repairs, or for emergency expenses. But can you get personal loans after bankruptcy? 

Bankruptcy has a huge effect on your finances for years after you file. Your credit score plummets, making it difficult to secure a personal loan or get a new credit card. Difficult, yes, but not impossible. There are lenders willing to work with every type of borrower.

Read on to learn where to find personal loans after bankruptcy and how to improve your chances of approval.

Jump to:

Can you get personal loans after bankruptcy?

Bankruptcy is not the end. You will be able to get personal loans, but it won’t be as easy as before.

Lenders now consider you a high-risk borrower. Many won’t approve you and those that do will charge steep interest rates and additional fees like an origination fee. Some lenders will even require you to secure the loan with collateral or add a cosigner.

That said, lenders will review your current financial situation, not just your past. If you’ve taken the time to rebuild credit, have a good income, and decreased your debt levels, you are more likely to qualify for a loan.

Types of bankruptcy

When filing for bankruptcy, most people opt for either Chapter 7 or Chapter 13. Which one you choose impacts your eligibility for personal loans.

Chapter 7 bankruptcy

Chapter 7 bankruptcy is often referred to as a “liquidation” bankruptcy. It requires you to sell all non-essential assets to repay creditors. Once completed, your eligible debts are discharged, meaning you are no longer required to pay them. This type of bankruptcy stays on your credit report for up to 10 years.

Getting a personal loan after Chapter 7 is a mixed bag. On the one hand, you can start rebuilding your credit and applying for loans or credit cards right away. On the other hand, lenders look less favorably on Chapter 7 bankruptcy, and it stays on your credit report longer.

Chapter 13 bankruptcy

Chapter 13 bankruptcy is a “reorganization” or “repayment” bankruptcy. You do not sell your assets. Instead, you establish a repayment plan with your creditors that lasts three to five years. Once completed, any remaining dischargeable debt is erased. Chapter 13 bankruptcy stays on your credit report for up to seven years.

Loans, while in bankruptcy, aren’t usually possible. You must wait three to five years until your debts are discharged to apply for a personal loan. When you do apply, lenders typically look at Chapter 13 bankruptcy more favorably since you repaid some of your debts.

Drowning in debt?

Find out if it’s time to file bankruptcy.

How long after bankruptcy can you get a personal loan?

The exact timing for getting a personal loan after bankruptcy varies by lender. The majority of lenders want you to wait at least one to two years after filing before applying. If you filed for Chapter 13, you have to wait until the repayment plan is complete – usually three to five years.

The longer it’s been since filing, the better terms you’ll receive. If you can, wait seven to ten years for the bankruptcy to fall off your credit report. Once the bankruptcy is off your report and your score has improved, you will have a much easier time securing a loan with favorable terms.

9.7
Moneyfor score

Turn Your Paid-Off Car into up to $2,000

  • Same Day Pre-approval
  • No Hidden Fees
  • Easy Online Inquiry Process

Turn Your Paid-Off Car into up to $2,000

Start Now
Review 12,985

Is getting a personal loan after bankruptcy difficult?

Securing a personal loan after bankruptcy will be challenging. Bankruptcy does enormous damage to your credit score, causing it to fall anywhere from 100 to 200 points. The exact amount varies based on your credit prior to filing.

Lenders are cautious and tend to charge more to high-risk borrowers. You will be able to find a loan but will have to pay more for it. The best thing to do is build up credit and then apply for a loan.

Do you have a poor score?

You can get a loan with a 500 credit score!

Where can you find personal loan lenders after bankruptcy?

Start with credit unions and local banks. Credit unions tend to have lower interest rates and lenient requirements. Local banks can be a good choice if you have a good relationship with them.

Online lenders that offer bad credit loans are another popular option. Many approve borrowers with less-than-stellar credit scores; some don’t even require a credit check. Before you apply, do a little research and make sure they have a good reputation.

How to get a loan after bankruptcy

Review your credit score

First, check your credit score. Most lenders have minimum credit score requirements. It’s no use applying for a loan you don’t meet the basic eligibility criteria for.

Many banks and credit cards let you check your credit score for free once per month. You can review your full credit report from each of the three major credit bureaus – Experian, Equifax, and TransUnion – once per year via annualcreditreport.com. And it’s free!

Look over your credit report for errors that can negatively affect your score. If you find any, dispute them with the issuing bureaus before applying for the loan. Getting a mistake off your report can give an immediate boost to your score.

Decide how much to borrow

It’s tempting to borrow the maximum amount you can get your hands on. The problem is loans need to be paid back on time. Lenders are more likely to approve loan amounts you can afford to repay.

Consider a cosigner

Adding a cosigner with good credit can increase your approval odds and help secure more favorable rates. This is because a cosigner decreases the lender’s risk since they are legally obligated to repay the loan if you fail to. Keep in mind that if you miss a monthly payment, both you and your cosigner’s credit scores will suffer.

Shop around for lenders

Don’t settle on the first offer. Research personal loans for bad credit and lenders. Compare loans, including interest rates, fees, amounts, and repayment terms. Look at customer reviews and the lender’s reputation to make sure you want to work with them. Taking the time to do a little research helps you get the best deal for your financial situation.

Get prequalified

Once you’ve found a few lenders, try to prequalify. Prequalifying lets you see your chances of approval without hurting your credit score. You submit basic personal and financial information and the lender does a soft inquiry to decide if you’re preapproved.

The basic information you’ll need typically includes:

  • Full name
  • Current address
  • Social Security Number
  • Income
  • Loan purpose
  • Loan amount
  • Cosigner information, if applicable

After you’ve prequalified with a few lenders, compare your potential offers. Look at the loan amount, annual percentage rate (APR), which includes both the interest rate and fees, and repayment terms. Then, choose the best loan offer for you.

Submit an application

After you’ve prequalified and selected the best offer, it’s time to formally apply. You will likely need to submit a few documents, including pay stubs, driver’s license, or passport.

Many lenders – especially online lenders – provide decisions as soon as the same day. Others may take a few business days to respond.

When emergencies happen, you need cash fast.

Get the emergency cash you need instantly!

Look out for predatory lending and personal loan scams

Not all lenders have your best interest at heart. A lot are out there trying to make a quick buck. After bankruptcy, you’re more likely to run into predatory lenders and scammers willing to take advantage of borrowers with bad credit.

Predatory lending

Predatory lenders are those who offer loans that are nearly impossible to repay. These loans have excessively high interest rates (think triple-digit APRs), hidden fees, short repayment terms (only one to two weeks), or balloon payments due at the end.

Yes, you should expect higher interest rates and additional fees after bankruptcy, but they should still be affordable.

Personal loan scams

If a loan seems too good to be true, it probably is. Avoid any lender that promises guaranteed approval (does not exist), upfront fees (legitimate lenders will take fees out of the loan after approval), contacts you first, and time-sensitive or high-pressure offers.

Legitimate lenders know that taking out a loan is not a decision to be made lightly. They will give you time to think it through. Take advantage of this time and research your lender. Check sites like the Better Business Bureau and Consumer Affairs before making a final decision.

Alternatives to personal loans after bankruptcy

If you need to borrow money after bankruptcy, there are options besides personal loans.

Payday alternative loan

Payday alternative loans (PAL) are a type of bad credit loan you can get through federal credit unions. They are small-dollar loans designed to be an alternative to payday loans.

The loan amount ranges from $200 to $2,000, with repayment terms of one to twelve months. Application fees are capped at $20, just enough to cover the cost of your application, the APR cannot exceed 18%. This is an incredibly low APR for a bad credit personal loan.

You have to be a member of the federal credit union for at least one month before you can apply.

Secured personal loan

If you have collateral, you may be able to get a secured personal loan. Here, your loan is backed by an asset like your car or savings account. The collateral lowers the lender’s risk, so they may offer a lower interest rate and more favorable terms. The catch is if you default on the loan, the lender can take possession of your collateral.

401(k) loan

A 401(k) loan lets you withdraw funds from your retirement account. You then repay the principal plus interest back into the account. All the money goes to you, not an external lender. It sounds ideal, but there are fees and risks involved.

If you borrow from your 401(k) before you’re 59 ½, you may have to pay taxes if you don’t repay the loan. Should you quit your job, you’ll have to repay the total amount due within 90 days. Lastly, when you take out a 401(k) loan, you lose potential investment returns and have to repay it using after-tax dollars.

Cash advance app

Cash advance apps send you a portion of your paycheck before payday. You get the money instantly (with a fee) or in one to three business days for free. There is generally no credit check, no interest, and little to no fees. Potential fees include a fast funding fee, subscription fee, or tip. Generally, you have to pay the cash back within two weeks or on your next payday.

These apps can be a good short-term solution when you need a little cash to get you through.

Interested in a short-term loan?

Here’s what you need to know about short term loans before you borrow.

Frequently asked questions

1. Which personal loans should you avoid after bankruptcy?

Avoid loans with triple-digit APRs and excessively short repayment periods. These loans may be easy to qualify for, but they are difficult to repay as agreed, often leading to a cycle of debt.

2. How long does it take to bounce back from bankruptcy?

Bankruptcy is a big deal. It won’t fall off your credit report until seven to ten years after filing, but you can start recovering from it right away. Follow a budget, pay your bills on time, open new credit accounts responsibly, and keep your utilization low. With responsible financial behavior, your credit score will start improving within 12 to 18 months.

3. How can you build credit after bankruptcy?

Building credit after bankruptcy is the same as before. Pay bills on time, reduce debt, and keep your credit utilization low to establish a positive payment history. Over time, your score will improve.

4. How soon after bankruptcy can you secure a loan?

You can secure a personal loan shortly after declaring bankruptcy, but you have to wait until your debts are discharged. Debts are immediately discharged with Chapter 7 bankruptcy and after three to five years with Chapter 13. While you can get a loan shortly after filing bankruptcy, waiting to improve your credit score can lead to better terms and lower interest rates.

Bottom line

Bankruptcy can hurt your credit for years and make it hard to qualify for a personal loan with favorable terms. Your best bet is to wait and improve your score. If you absolutely need to borrow money now, look into secured loans, opt for a co-signer, or find a lender who offers personal loans for people with bad credit. Beware of high interest rates and additional fees. Ensure you only borrow what you need and pay it back on time. Do so, and you can rebuild your credit and be eligible for better loans in the future.

1. Paycheck Advance is For eligible customers only. Your actual available Paycheck Advance amount will be displayed to you in the mobile app and may change from time to time. Conditions and eligibility may vary and are subject to change at any time, at the sole discretion of Finco Advance LLC, which offers this optional feature. Finco Advance LLC is a financial technology company, not a bank. Expedited disbursement of your Paycheck Advance is an optional feature that is subject to an Instant Access Fee and may not be available to all users. Expedited disbursements may take up to an hour. For more information, please refer to Paycheck Advance Terms and Conditions.
2. Current is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Member FDIC, and Cross River Bank, Member FDIC. The Current Visa® Debit Card is issued by Choice Financial Group pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. The Current Visa® secured charge card is issued by Cross River Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see the back of your Card for its issuing bank. Current Individual Account required to apply for the Current Visa® secured charge card. Independent approval required.
3. Individual results may vary. Using your credit card responsibly may allow you to improve your credit score. Credit building depends on various factors, including your payment history, credit utilization, length of credit history, and other financial activities.
4. Faster access to funds is based on comparison of traditional banking policies and deposit of paper checks from employers and government agencies versus deposits made electronically. Direct deposit and earlier availability of funds is subject to timing of payer’s submission of deposits.
5. Current is a financial technology company, not a bank. Banking services provided by Choice Financial Group. Funds held in Savings Pods are FDIC-insured on a pass-through basis up to $250,000 at our partner bank Choice Financial Group, member FDIC
6. Actual overdraft amount may vary and is subject to change at any time, at Current’s sole discretion. In order to qualify and enroll in the Fee-Free Overdraft feature, you must receive $500 or more in Qualifying Deposits into your Current Account over the preceding 30-day period. For more information, please refer to Fee-free Overdraft Terms and Conditions.
7. You may earn Points in connection with your everyday spending and by completing other actions that Current designates as subject to the Current Points Program. The amount of Points granted for different actions as well as the purchase requirements necessary to earn Points will vary, and is subject to Current’s sole discretion. After qualifying, please allow 3-5 business days for points to post to your Current account. The Current Points program is not available to Teen Account holders. See Current Points Terms and Conditions.
8. Some fees may apply, including out of network ATM fees of $2.50 per transaction, late payment fees of 3% of any total due balance outstanding and past due for two or more billing cycles, foreign transaction fees of 3% of the full transaction amount (minimum $0.50), card replacement fees per card of $5 for regular delivery and $30 for expedited delivery, cash deposit fees of $3.50 per deposit, and third party processing fees.
9. Boost Bonuses are credited to your Savings Pods within 48 hours of enabling the Boost feature and on a daily basis thereafter, provided that the Savings Pod has accrued a Boost Bonus of at least $0.01. The Boost rate on Savings Pods is variable and may change at any time. The disclosed rate is effective as of August 1, 2023. Must have $0.01 in Savings Pods to earn a Boost rate of either 0.25% or 4.00% annually on the portion of balances up to $2000 per Savings Pod, up to $6000 total. The remaining balance earns 0.00%. A qualifying direct deposit of $200 or more is required for 4.00%. No minimum balance required. For more information, please refer to Current Boost Terms and Conditions.
10. Cryptocurrency services are powered by Zero Hash LLC and Zero Hash Liquidity Services LLC, and may not be available in all states. Terms and conditions apply. When you buy or sell cryptocurrency, a difference between the current market price and the price you buy or sell that asset for is called a spread. However, unlike most other exchanges Current does not charge an additional trading fee. Cryptocurrency transactions are a form of investment, and all investments are subject to investment risks, including possible loss of the principal amount invested. Cryptocurrency is not insured by the FDIC or any other government-backed or third-party insurance. Your purchase of cryptocurrency is not a deposit or other obligation of, or guaranteed by, Choice Financial Group or Cross River Bank. The cryptocurrency assets in your Zero Hash account are not held at Current, Choice Financial Group, or Cross River Bank. Current, Choice Financial Group, and Cross River Bank are not responsible for the cryptocurrency assets held in any Zero Hash account. Neither Current, Choice, nor Cross River Bank is involved in the purchase, sale, exchange of fiat funds for cryptocurrency, or custody of the cryptocurrencies. Terms and Conditions apply (platform and user agreements). Crypto on Current is not currently available in HI. Licensed to engage in Virtual Currency Business Activity by the New York State Department of Financial Services. This does not constitute investment advice.
11. Current is a financial technology company, not a bank. Banking services provided by Choice Financial Group. Your money is FDIC-insured on a pass-through basis up to $250,000 at each of our partner banks, Choice Financial Group and Cross River Bank, members FDIC.
12. Average value based on Fine Hotels + Resorts bookings in 2023 for stays of two nights. Benefits include daily breakfast for two, room upgrade upon arrival when available, $100 amenity, guaranteed 4PM late checkout, and noon check-in when available. Certain room categories not eligible for upgrade. $100 amenity varies by property. Actual value will vary based on property, room rate, upgrade availability, and use of benefits.
13. Up to $500 per Covered Trip that is delayed for more than 6 hours; and 2 claims per Eligible Card per 12 consecutive month period. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by New Hampshire Insurance Company, an AIG Company.
14. The maximum benefit amount for Trip Cancellation and Interruption Insurance is $10,000 per Covered Trip and $20,000 per Eligible Card per 12 consecutive month period. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by New Hampshire Insurance Company, an AIG Company.
15. Baggage Insurance Plan coverage can be in effect for Covered Persons for eligible lost, damaged, or stolen Baggage during their travel on a Common Carrier Vehicle (e.g. plane, train, ship, or bus) when the Entire Fare for a ticket for the trip (one- way or round-trip) is charged to an Eligible Card. Coverage can be provided for up to $2,000 for checked Baggage and up to a combined maximum of $3,000 for checked and carry-on baggage, in excess of coverage provided by the Common Carrier. The coverage is also subject to a $3,000 aggregate limit per Covered Trip. For New York State residents, there is a $2,000 per bag/suitcase limit for each Covered Person with a $10,000 aggregate maximum for all Covered Persons per Covered Trip. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company.
16. Car Rental Loss and Damage Insurance can provide coverage up to $75,000 for theft of or damage to most rental vehicles when you use your eligible Card to reserve and pay for the entire eligible vehicle rental and decline the collision damage waiver or similar option offered by the Commercial Car Rental Company. This product provides secondary coverage and does not include liability coverage. Not all vehicle types or rentals are covered. Geographic restrictions apply. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company. Car Rental Loss or Damage Coverage is offered through American Express Travel Related Services Company, Inc.
17. Coverage for a Stolen or damaged Eligible Cellular Wireless Telephone is subject to the terms, conditions, exclusions, and limits of liability of this benefit. The maximum liability is $800, per claim, per Eligible Card Account. Each claim is subject to a $50 deductible. Coverage is limited to two (2) claims per Eligible Card Account per 12 month period. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by New Hampshire Insurance Company, an AIG Company.
18. When an American Express® Card Member charges a Covered Purchase to an Eligible Card, Extended Warranty§ can provide up to one extra year added to the Original Manufacturer’s Warranty. Applies to warranties of five (5) years or less. Coverage is up to the actual amount charged to your Card for the item up to a maximum of $10,000; not to exceed $50,000 per Card Member account per calendar year. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company.
19. Purchase Protection is an embedded benefit of your Card Membership and requires no enrollment. It can help protect Covered Purchases made on your Eligible Card when they’re accidentally damaged, stolen, or lost, for up to 90 days from the Covered Purchase date. The coverage is limited to up to $10,000 per occurrence, up to $50,000 per Card Member account per calendar year. Coverage Limits Apply. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company.
20. Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC.
21. The secured Chime Credit Builder Visa® Card is issued by Stride Bank, N.A., Member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted.
22. Banking services and debit card provided by The Bancorp Bank N.A. or Stride Bank, N.A., Members FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted.
23. The Annual Percentage Yield (“APY”) for the Chime Savings Account is variable and may change at any time. The disclosed APY is effective as of September 20, 2023. No minimum balance required. Must have $0.01 in savings to earn interest.
24. There’s no fee for the Chime Savings Account. Cash withdrawal and Third-party fees may apply to Chime Checking Accounts. You must have a Chime Checking Account to open a Chime Savings Account.
25. To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Chime Checking Account. The qualifying direct deposit must be from your employer, payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash loads or deposits, one-time direct deposits, such as tax refunds and other similar transactions, and any deposit to which Chime deems to not be a qualifying direct deposit are not qualifying direct deposits.
26. Money added to Credit Builder will be held in a secured account as collateral for your Credit Builder Visa card, which means you can spend up to this amount on your card. This is money you can use to pay off your charges at the end of every month.
27. Based on a representative study conducted by Experian®, members who made their first purchase with Credit Builder between June 2020 and October 2020 observed an average FICO® Score 8 increase of 30 points after approximately 8 months. On-time payment history can have a positive impact on your credit score. Late payment may negatively impact your credit score.
28. On-time payment history may have a positive impact on your credit score. Late payment may negatively impact your credit score. Chime will report your activities to Transunion®, Experian®, and Equifax®. Impact on your credit may vary, as Credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations.
29. Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date.
30. SpotMe® on Debit is an optional, no fee overdraft service attached to your Chime Checking Account. To qualify for the SpotMe on Debit service, you must receive $200 or more in qualifying direct deposits to your Chime Checking Account each month and have activated your Visa debit card. Qualifying members will be allowed to overdraw their Chime Checking Account for up to $20 on debit card purchases and cash withdrawals initially but may later be eligible for a higher limit of up to $200 or more based on Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. The SpotMe on Debit limit will be displayed within the Chime mobile app and is subject to change at any time, at Chime’s sole discretion. Although Chime does not charge any overdraft fees for SpotMe on Debit, there may be out-of-network or third-party fees associated with ATM transactions. SpotMe on Debit will not cover any non-debit card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. SpotMe on Debit Terms and Conditions.
31. Tipping or not tipping has no impact on your eligibility for SpotMe®.
32. Out-of-network ATM withdrawal fees may apply except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.
33. Save When I Get Paid automatically transfers 10% of your direct deposits of $500 or more from your Checking Account into your savings account.
34. Round Ups automatically round up debit card purchases to the nearest dollar and transfer the round up from your Chime Checking Account to your savings account.
35. Mobile Check Deposit eligibility is determined by Chime in its sole discretion and may be granted based on various factors including, but not limited to, a member’s direct deposit enrollment status.
36. Funds are automatically debited from your Checking Account and typically deposited into the recipient’s Checking Account within seconds. Pay Anyone transactions will be monitored and may be held, delayed or blocked if the transfer could result in fraud or another form of financial harm. Sometimes instant transfers can be delayed.
37. Pay Anyone transactions will be monitored and may be held, delayed or blocked if the transfer could result in fraud or another form of financial harm. Sometimes instant transfers can be delayed. Non-Chime members must use a valid debit card to claim funds.
* EarnIn is not available for Connecticut residents
Read more

About the author

Rachel Alulis

Rachel Alulis has been the lead editor for Moneyfor’s credit cards team since 2015 and for the financial rewards team since 2023. Before joining Moneyfor, Rachel worked at USA Today and the Des Moines Register. She then established a successful freelance writing and editing business specializing in personal finance. Rachel holds a bachelor’s degree in journalism and an MBA.

Read more