Filing for bankruptcy doesn’t close the door on borrowing. You can still get a personal loan after bankruptcy, but approval depends on the type of bankruptcy, how long it’s been since discharge, and each lender’s policies.
The two most common filings are Chapter 7, which clears debts quickly but harms credit in the long term, and Chapter 13, which restructures debt over several years. Each shapes your path back to credit in its own way. For Chapter 7 filers in particular, options tend to be more limited at first, and most approvals are for smaller loan amounts with higher costs. Loans after bankruptcy are still possible with the right approach, but expectations matter. Especially if you’re actively working on reducing outstanding balances and estimating how long repayment will take.
Key Takeaways
- Loans after bankruptcy are available, but approval usually means smaller amounts, higher rates, and closer review of your finances. particularly for borrowers rebuilding from damaged credit profiles.
- Credit unions and some banks that specialize in post-bankruptcy lending may consider applicants sooner than large national banks, often for modest loan amounts rather than large unsecured loans.
- Personal loans for discharged bankrupts, including those seeking a personal loan after Chapter 7, become more realistic after you’ve rebuilt some positive credit history, not simply because time has passed. Personal loans after Chapter 7 are more attainable once you rebuild positive credit, not just with time alone.
Can You Get Loans and Credit Cards After Bankruptcy?
Access to new credit is still possible after bankruptcy, but lenders take a cautious, risk-based approach when you’re deciding whether bankruptcy is right for you They’ll look closely at your recent payment history, overall debt load, and signs that you’re rebuilding responsibly.
- Expect smaller loan limits, stricter terms, and higher APRs, especially at the beginning.
- Some lenders offer bankruptcy loans or accept past bankruptcy filings, but approval still depends on your current ability to repay.
- Unsecured personal loans shortly after Chapter 7 often come with higher costs and tighter borrowing limits than many borrowers anticipate.
Disclaimer: Loan terms, interest rates, and approval criteria vary by lender and individual financial circumstances. This information is for general guidance only and does not constitute financial advice.
Chapter 7 vs. Chapter 13 Basics
Chapter 7, or liquidation bankruptcy, clears most unsecured debts in three to six months but stays on your credit report for up to 10 years. Because Chapter 7 does not involve repayment, many lenders view it as higher risk than Chapter 13, and some expect at least a year or more of steady post-discharge payments before considering approval.Some personal loan lenders that work with Chapter 7 focus on smaller loan amounts and higher oversight during the first year after discharge.
Chapter 13, often called the wage earner’s plan, allows you to keep property while repaying debts over three to five years. It remains on your credit report for seven years. While limited, some personal loan lenders that work with Chapter 13 may review applications with trustee approval and documented income stability.
In Chapter 13, any new borrowing during repayment usually requires the bankruptcy trustee’s permission. This means filing a court request explaining why the loan is necessary and how you’ll afford it without derailing your repayment plan. Even with a strong case, approval is not guaranteed and varies by court and trustee.
| Feature | Chapter 7 Bankruptcy | Chapter 13 Bankruptcy |
| Bankruptcy Type | Liquidation | Wage earner’s repayment plan |
| How It Works | Clears most unsecured debts without repayment | Repays debts through a court-approved plan |
| Typical Timeline | 3–6 months to complete | 3–5 years repayment period |
| Credit Report Impact | Remains for up to 10 years | Remains for up to 7 years |
| Lender Risk Perception | Viewed as higher risk since no repayment occurs | Viewed as lower risk due to repayment effort |
| Access to Personal Loans | Limited at first; usually smaller loan amounts with higher scrutiny | Limited during repayment; possible only with trustee approval |
| Borrowing During Bankruptcy | Not applicable once discharged | Requires bankruptcy trustee approval |
| Trustee Approval Needed | No | Yes, for any new borrowing during repayment |
| Typical Waiting Period for Unsecured Loans | 12–24 months after discharge | Often after plan completion; rare during active plan |
| Secured Loan Availability | Some secured loans may be available soon after discharge | Secured loans may be possible with approval and stable income |
| Lender Flexibility | Some lenders consider applications after 1+ year of positive credit behavior | Very limited; approvals vary by court and trustee |
| Best Early Credit Options | Secured loans, auto loans, credit-building products | Limited credit use with court permission |
Discharge Timelines and Lender Waiting Periods
After bankruptcy, time is one of the most significant factors in regaining loan eligibility. Even once your case is discharged, most lenders impose a waiting period before they’ll consider a new application. For many unsecured products, that window is 12 to 24 months, and approvals during this period are typically limited to smaller loan amounts or higher-cost products.
Despite how long Chapter 7 may remain on a credit report, many borrowers qualify for some form of credit within one to two years by demonstrating steady payments and responsible use of new accounts. Mainstream unsecured personal loans with competitive rates usually take longer to access.
Some secured products, such as auto loans or savings-backed personal loans, may be available soon after discharge if you can show steady income. These can serve as stepping stones while you rebuild.
How Bankruptcy Affects Credit Scores
FICO data and industry research show that bankruptcy can sharply lower credit scores, with the steepest drops hitting those who start with the highest scores.
- High scores (around 780): A bankruptcy can lower a score by 200 to 240 points.
- Average scores (around 680): The decline is typically 130-150 points.
- Low scores (already damaged): The additional hit may be more minor, and in some cases, scores even rise as unmanageable debts are cleared and utilization improves.
The depth of the hit also depends on the type of bankruptcy and the number of accounts included. A Chapter 7 filing is generally viewed more harshly than a Chapter 13, which shows a repayment effort. But the real turning point comes after the case is closed: lenders focus on what you do next.
Steps To Get a Personal Loan After Bankruptcy
Getting a personal loan after bankruptcy comes down to preparation. The more you can show lenders that your finances are back on track, the better your chances of approval.
- Check Your Credit Report
Start by pulling your reports from Equifax, Experian, and TransUnion. Look for errors, confirm that discharged accounts are reported correctly, and dispute any inaccuracies. A clean report makes it easier for lenders who offer loans for bankruptcies to evaluate you fairly.
- Prequalify with Lenders that Accept Bankruptcies
Some online and community lenders are more flexible than large banks. Prequalifying lets you view potential terms without harming your score, but offers are often limited to smaller amounts early on.
- Compare Secured and Unsecured Options
A secured loan, backed by savings or a vehicle, is usually easier to qualify for and may offer lower interest. Unsecured loans are harder to get right after bankruptcy, but may become accessible as your credit improves.
- Understand Lender Approval Factors
After bankruptcy, lenders want signs that you can manage debt responsibly. They’ll look at your income compared to your existing obligations to judge whether you can handle another payment.
A steady job history shows stability, while a record of on-time payments suggests you’ve turned a corner. Even modest savings can help, since they reassure lenders that you have a cushion to avoid default.
Loan Types to Consider
After bankruptcy, borrowers may find different lending products available depending on their credit profile, income, and discharge status. Here are the main options to know about:
Credit-Builder Loans
Credit-builder loans can help establish positive payment history, especially for thin credit files. They support long-term rebuilding but usually don’t offset the impact of a recent Chapter 7 on their own.
Co-Signed Loans
A co-signed loan works like a standard personal loan, with amounts ranging from a few thousand dollars to $20,000 or more. You receive the money up front and repay it over one to five years. The key difference is that a co-signer with stronger credit agrees to share responsibility.
This reduces the lender’s risk and often leads to lower rates than you would qualify for on your own. Every payment is reported to both your credit file and your co-signer’s, so responsible repayment helps you rebuild while protecting their score.
Small-Dollar Installment Loans
These loans provide modest sums without payday-style lump-sum repayment and are often used to cover short-term needs, such as $1,000 emergency expenses, while rebuilding credit
Auto Loans
Auto loans are among the more accessible types of credit after bankruptcy because the vehicle serves as collateral. Loan amounts depend on the purchase price and your down payment, and repayment periods generally range from two to six years.
Funds are sent directly to the dealership or seller, not to you, but the loan itself is reported to credit bureaus, which helps rebuild history if payments are made on time. Interest rates may be higher immediately after bankruptcy, but a larger down payment or co-signer can improve the terms.
Home Equity Loans and HELOCs
If you own a home with equity, you may qualify for a home equity loan or a line of credit (HELOC). These products allow you to borrow against your property, often in amounts of tens of thousands of dollars, with repayment terms of 5 to 15 years.
Because your home secures the loan, rates are typically lower than those of unsecured products. However, defaulting puts your property at risk. Approval is rare immediately after bankruptcy, so these loans are usually only an option for borrowers several years into recovery with steady income.
Peer-to-Peer (P2P) Loans
Individual investors fund peer-to-peer loans through online platforms. Borrowing amounts range from $1,000 to $40,000, with repayment terms of three to five years. Funds are deposited upfront upon investor commitment. These loans are reported to credit bureaus so that successful repayment can improve your credit profile.
Credit Union Hardship Loans
Credit union hardship loans are designed to provide small amounts of relief, usually between $200 and $2,000, to members facing emergencies. Funds are released upfront and typically repaid over six to 24 months.
Because they are offered through member-focused institutions, terms are more flexible, and state credit union regulations cap interest rates.
Buy Now, Pay Later (BNPL)
Buy Now, Pay Later services let you split small purchases, such as electronics or clothing, into multiple payments. The purchase is made upfront, and repayment terms usually span 6 weeks to 12 months.
Some providers report to credit bureaus, though many do not, so the credit-building benefit depends on the company.
Payday Loans
Payday loans offer tiny amounts, usually $100 to $1,000, due in full on your next payday. Funds are released immediately, but these loans rarely report to credit bureaus, so they don’t build credit even if repaid on time.
Interest rates are incredibly high, often above 300% APR, which makes them difficult to repay without rolling them over into another loan.
Title Loans
Title loans allow you to borrow against your vehicle’s title, usually for 25–50% of its value. Cash is released upfront, but repayment is often required within 30 days. Most title lenders do not report positive payments to credit bureaus, so these loans don’t usually help rebuild credit.
Interest rates are high, and failure to repay can result in the repossession of your car. They are technically available to borrowers after bankruptcy but come with serious risks.
| Loan Type | Typical Loan Amount | Repayment Term | Credit-Building Value | Key Pros | Key Risks / Drawbacks |
| Credit-Builder Loans | Small (varies by lender) | Short to mid-term | High (long-term) | Helps establish positive payment history | Limited impact right after Chapter 7 |
| Co-Signed Loans | A few thousand to $20,000+ | 1–5 years | High | Lower rates, higher approval odds | Co-signer is fully responsible if you miss payments |
| Small-Dollar Installment Loans | $300–$1,000+ | Short-term | Moderate | No lump-sum repayment, helps cover emergencies | Often high APRs if not compared carefully |
| Auto Loans | Based on vehicle price | 2–6 years | High | Easier approval due to collateral | Higher interest rates after bankruptcy |
| Home Equity Loans / HELOCs | Tens of thousands | 5–15 years | Moderate | Lower rates due to collateral | Risk of losing your home; rare soon after bankruptcy |
| Peer-to-Peer (P2P) Loans | $1,000–$40,000 | 3–5 years | High | Reported to credit bureaus, online access | Rates depend heavily on credit profile |
| Credit Union Hardship Loans | $200–$2,000 | 6–24 months | Moderate | Lower rates, flexible terms | Membership required; limited amounts |
| Buy Now, Pay Later (BNPL) | Small purchase amounts | 6 weeks–12 months | Low to Moderate | Easy approval, short repayment | Many providers don’t report to credit bureaus |
| Payday Loans | $100–$1,000 | Due next payday | None | Fast cash access | Extremely high APRs (300%+), debt cycle risk |
| Title Loans | 25–50% of car value | ~30 days | Low | Quick access with bad credit | Risk of car repossession, high interest |
FAQ
If you’re looking for a personal loan after bankruptcy, you probably have specific questions about timing, lenders, and what’s realistic. Here are clear answers to the most common ones.
Does Bankruptcy Stop You From Getting a Loan?
Bankruptcy doesn’t ban you from borrowing, but it narrows your options. Some lenders won’t consider applicants with a recent filing, while others specialize in post-bankruptcy credit. Approval often requires proof of steady income and responsible use of new accounts.
How Soon Can I Get a Personal Loan After Chapter 7?
Eligibility depends on the lender. Some credit unions or online lenders review applications within a year of discharge, especially for smaller amounts. Larger banks usually wait longer, focusing on borrowers who have rebuilt credit through tools like secured cards.
How Long After Bankruptcy Can I Get a Car Loan?
Auto loans are often easier to obtain after bankruptcy because the vehicle serves as collateral for the lender. Many borrowers can qualify just a few months after discharge, although interest rates are typically higher at first due to increased credit risk.
What Are the Banks that Work with Bankruptcies for Personal Loans?
Most big banks avoid lending immediately after bankruptcy. However, credit unions, community banks, and some online lenders are more flexible in their lending practices.