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Can You Get A Loan After Filing for Bankruptcy?

Last updated 03/19/2024 by

Jessica Walrack
Although fewer Americans file for bankruptcy every year, it’s still a reality that many must face. In 2018, Americans filed approximately 753,300 bankruptcies (source). In desperate moments, bankruptcy is a stressful but necessary process. But after bankruptcy, what comes next? How long does it take to recover? And how soon can you get approved for a loan after bankruptcy?
We’ll help you figure out what to expect after filing bankruptcy, which lenders are bankruptcy-friendly, and how you can easily find the best loan rates available to you.

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What to expect after you file bankruptcy

As long as your bankruptcy is on your credit report, it will hurt your credit score. Unfortunately, this will deter some lenders from approving you for loans and credit lines.

How long does bankruptcy stay on your credit report?

A Chapter 7 bankruptcy remains on your credit report for 10 years. It’s a little better with a Chapter 13 bankruptcy, which remains on your credit report for 7 years.
Luckily, if you need a loan after bankruptcy, you still have options. There are lenders who will lend to you after bankruptcy, especially if you are steadily employed and willing to pay a high interest rate. How soon you can get a loan after bankruptcy depends on which type of bankruptcy you filed.

Chapter 7 bankruptcy

With a Chapter 7 bankruptcy, your property is liquidated to cover your debts, and any remaining balances are discharged. The whole process can usually be resolved within a few months, and there are no payments to make afterward.
Because of this relatively expedient process, you could feasibly accumulate enough disposable income to get approved for a small loan just a few months after bankruptcy.

Chapter 13 bankruptcy

With Chapter 13 bankruptcy, you set up a payment plan to repay your debt, typically over a period of three to five years. When the payment plan is complete, the remaining debt gets discharged. However, while the payment plan is still active, your monthly payments may leave you with little-to-no disposable income. This can make it hard to get approved for a loan.
It’s likely that you can get approved for a loan sooner if you filed Chapter 7, but there’s no guarantee. Likewise, if you find a well-paying job that doubles your disposable income, you may be able to find a loan even with a Chapter 13 payment plan. Loan approval depends on a number of factors, including your employment situation, income, debt-to-income ratio, credit score. Some lenders will even consider your education history and civil status before making you an offer.

Where can you find a loan after bankruptcy?

While many lenders will not approve borrowers with a bankruptcy on their record, some will consider them on a case-by-case basis. Bankruptcy certainly increases your level of risk for the lender, but there are steps you can take to offset the risk. How? If you have valuable assets, such as a car or a home, left after the bankruptcy, you can use them as security for a loan. Having a high-income and agreeing to pay a medium-to-high interest rate will also improve your chances of qualifying for a loan.
But be careful, and don’t take the first offer you see. Taking out a loan with high interest rates and short terms could push you right back into financial turmoil.

Which lenders will consider borrowers with recent bankruptcies?

Having a recent bankruptcy will make it very hard to qualify for a loan with most lenders. However, these lenders may consider borrowers with a previous bankruptcy if they meet their other eligibility criteria.

To get the best deal, shop around and review all of the rates and terms carefully. Analyze which offer is best and ensure you will be able to fulfill the repayment plan. You don’t want to end up with a negative credit line right after you clear your record with a bankruptcy.

How to compare loan offers

How do you find the best loan after bankruptcy? Consider the following factors.
  • Interest. How much will interest cost you overall? Which lender is offering the most competitive rate?
  • Fees. What is the total cost of the fees the lender charges? Watch out for hidden fees in the fine print.
  • Loan amount. Does your chosen lender offer loans that suit your needs? If you need $1000 and a lender will only loan up to $500, you’ll need to find another offer.
  • Repayment period. Find out how long you’ll have to repay the loan and make sure that you can afford the monthly payments. The longer the repayment period, the lower the installment payment amount, but the more interest you’ll pay overall.
  • Customer service. Lenders should treat borrowers with honesty, fairness, and respect. Read customer reviews to find out how well a lender has treated past customers. Real client feedback is a great predictor of the experience you can expect.
  • Approval requirements. Check to see if you meet the eligibility requirements.
Keep this list on-hand and check each of the factors for the lenders you are considering. Then, compare the total packages of various lenders against each other to find the best deal.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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Jessica Walrack

Jessica Walrack is a personal finance writer at SuperMoney, The Simple Dollar,, Commonbond, Bankrate, NextAdvisor, Guardian, and many others. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.

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